Sadasivan A/l Muthu v 1. ) Sadasivan A/l Muthu (NA-22NCvC-19-04/2019)

AND RAMASAMY AMAIPPAN …DEFENDANTS

PENTADBIR TANAH, PEJABAT TANAH & DAERAH SEREMBAN GROUNDS OF JUDGMENT

The plaintiff in this case, Mr Sadasivan Muthu, owned a 1/11 share of a piece of real property in Mukim Setul, Seremban. It was not a large piece of land, measuring just 5,641 square feet. There were 11 other co-proprietors who each held an undivided share in the property. Mr Sadasivan purchased his share of the property in 1978.

Around 2016, Mr Sadasivan discovered to his shock and dismay that his property had been transferred to a third party without his knowledge. He sued the defendants, seeking principally for the return of his share of the property. At the time of trial, he was eighty years old. The parties 3. The first defendant was the lawyer who had attested the relevant land transfer forms, while the second defendant was the law firm in which he was practising. The third and fourth defendants were the co-proprietors in whose name the subject property was registered at the time of trial. The fifth defendant was the land administrator. 08/08/2024 15:39:49 NA-22NCvC-19-04/2019 Kand. 101 Sadasivan Muthu v Ramasamy Amaippan 2 Material facts 4. It transpired that on 29 December 2009, the plaintiff’s share, together with the shares belonging to nine other proprietors, had been transferred to one Chellathurai Ramasamy. At the time, Chellathurai Ramasamy already held a 1/11 share in the property. Another 1/11 share belonging to one Lashmana Kerishna had been transferred much earlier on 23 October 2003 to one Muniswaran Shanmugam.

The Form 14A transfer had not been executed by the plaintiff, and it also bore an identity card number that was not that of the plaintiff. The solicitor who attested the transfer form was the first defendant, Ramasamy Amaippan, who practiced in the firm of Lim Ram & Associates, the second defendant.

Thus, at the end of 2009, Chellathurai Ramasamy held 10/11 of the property, with the remaining share held by Muniswaran. Little more than two months later, on 2 March 2010, Chellathurai transferred:

9/11 share of the property to one Poobalan Thabaguram. The Form 14A stated the consideration to be RM225,000. The solicitor who attested the Form 14A was again the first defendant, Mr Ramasamy Amaippan;

1/11 share to one Jeevaji Ganaesan Muniandy.

The incontrovertible evidence received at trial showed that the identity card numbers purportedly belonging to Chellathurai Ramasamy and Poobalan Thabaguram did not exist in the records of the National Registration Department.

By 5 April 2010, the property was held in the name of three persons:

Muniswaran, to whom a 1/11 share had been transferred in 2003;

Poobalan, who had purchased 9/11 of the property from Chellathurai; and

Jeevaji Ganaesan Muniandy, who held a 1/11 share that had also been purchased from Chellathurai.

On this date, 5 April 2010, all three of them transferred their shares in the subject property to the third and fourth defendants, Mr Yee Yau Choy and Mr Sadasivan Muthu v Ramasamy Amaippan 3 Gan Lee Fong. Mr Yee and Mr Gan became joint proprietors, each holding a half share in the subject property.

Upon discovery of the dealings on his property, the plaintiff entered a private caveat on the subject property on 30 January 2019.

The chronology of key events are set out below: Date Event 23 October 2003 Lashmana Kerishna transfers 1/11 share to Muniswaran Shanmugam. 29 December 2009 The transfer from nine proprietors to Chellathurai Ramasamy are recorded. Chellathurai thus holds 10/11 of the subject property (having already held 1/11 prior to the transfer). 2 March 2010 Chellathurai Ramasamy transfers:  9/11 to Poobalan Thabaguram; and  1/11 to Jeevaji Ganaesan Muniandy. 5 March 2010 The 9/11 share recorded in the name of Poobalan Thabaguram, the 1/11 share recorded in the name of Jeevaji Ganaesan Muniandy and the 1/11 share recorded in the name of Muniswaran are transferred to the third and fourth defendants, who each held an undivided half share in the subject property. 30 January 2019 The plaintiff enters a private caveat over the subject property. The plaintiff’s claim 12. The plaintiff sued the first and second defendants for negligence and for fraud. Against the fifth defendant, the plaintiff alleged negligence in allowing the fraudulent transfers to be effected.

As against the third and fourth defendants (who were the current registered proprietors of the subject property), the plaintiff sought to defeat their title to the subject property. The basis of his claim against the third and fourth defendants was set out in paragraph 25 of the statement of claim, which is reproduced below:

Sadasivan Muthu v Ramasamy Amaippan 4 Plaintif plid bahawa pindahmilik hartanah tersebut kepada Defendan Ketiga dan Keempat adalah tidak sah, batal dan tiada efek disebabkan atas alasan-alasan tersebut:

Pindahmilik hartanah tersebut kepada Defendan Ketiga dan Keempat melalui No. Perserahan 1030/2010 adalah tidak sah kerana penjual yang bernama Poobalan A/L Thabaguram (No. K/P: 781101-14-6097) tidak pernah wujud;

Ia adalah mustahil untuk penjual yang kononnya bernama Poobalan A/L Thabaguram untuk memiliki sesuatu hartanah dan membuat pindahmilik tersebut memandangkan tidak ada orang yang wujud atas nama dan nombor kad pengenalan tersebut;

Maka, tandatangan Poobalan A/L Thabaguram dalam Borang 14A bertarikh 5.4.2010 telah dipalsukan;

Plaintif tidak pernah menjual hartanahnya kepada seorang yang bernama Chellathurai A/L Ramasamy dan/atau membuat apa-apa pindahmilik dengan nombor perserahan 2758/2009;

Maka, pindahmilik hartanah sebanyak 9/11 bahagian bersama-sama satu plot hartanah milik Plaintif daripada Poobalan A/L Thabaguram kepada Defendan Ketiga dan Keempat adalah batal tidak sah dan tiada efek;

Pindahmilik yang dilakukan dengan nombor perserahan 1030/2010 kepada Defendan Ketiga dan Keempat adalah dilakukan secara frod maka pindahmilik tersebut adalah tidak sah, batal dan tiada efek;

Defendan Pertama telah secara cuai dan/atau frod menandatangani Borang 14A sebagai saksi bagi penjual yang bernama Poobalan A/L Thabaguram;

Defendan Ketiga dan Keempat gagal untuk memastikan sama ada pindahmilik dengan nombor perserahan 1030/2010 dilaksanakan dengan tulen tanpa frod; dan

Defendan Ketiga dan Keempat gagal mengenal pasti sama ada penjual-penjual yang dinamakan dalam Borang 14A, benar-benar menandatangani Borang 14A di hadapan peguamnya iaitu Defendan Pertama yang menandatangani sebagai saksi bagi ketiga-tiga penjual dalam perserahan nombor 1030/2010 yang bernama Jeevaji Ganaesan A/L Muniandy, Muniswaran A/L Shanmugam dan Poobalan A/L Thabaguram. Counterclaim by D3 and D4 14. The third and fourth defendants counterclaimed against the plaintiff for what they alleged was the wrongful entry of a private caveat. Sadasivan Muthu v Ramasamy Amaippan 5 Summary of the decision of the court 15. After a full trial of the action, the court allowed the plaintiff’s claim against the third and fourth defendants, but only in respect of 1/11 of the subject property. The plaintiff was restored to the register of titles in respect of his 1/11 share, and the fifth defendant was ordered to effect his registration as such.

The claims against all the other defendants were dismissed. Only the third and fourth defendants have appealed against the determination of the court, and hence these grounds will not address the claim against the other defendants except to state that:

the claim for negligence against first and second defendants was dismissed on account of my finding that no duty of care was owed to the plaintiff, as he was never a client of the second defendant;

the claim for fraud against the first and second defendants was based on circumstantial evidence. Although the circumstances of the case did raise certain questions, I was of the view that the evidence before me did not prove that the first defendant was privy to the fraud that had been perpetrated on the plaintiff. The action for fraud against the first and second was thus dismissed; and

the claim against the fifth defendant was dismissed, as I accepted the evidence of the representative from the land office that, at the material time, there was no requirement for the identity card number of a registered proprietor to be recorded on the title. ANALYSIS Issues 17. The key and determinative issues in this case were whether the third and fourth defendants have obtained indefeasible title to the subject property, or whether their titles were defeasible at the instance of the plaintiff, and the question of whether the third and fourth defendants could avail themselves of the protection accorded by the proviso to section 340(3) of the National Land Code to a bona fide purchaser for valuable consideration. Sadasivan Muthu v Ramasamy Amaippan 6 18. The objective undisputed facts as narrated in the preceding paragraphs may appear to be more complicated than they actually are. I set out below a diagrammatical representation of the transactions to aid in understanding them: Chellathurai’s 1/11 share 5 April 2010 Jeevaji Ganaesan transfers 1/11 to D3 and D4 12 co-proprietors with 10 holding 1/11 share and two holding 1/22 share in the subject property 23 October 2003 Lashmana Kerishna transfers 1/11 to Muniswaran Shanmugam 29 December 2009 Shares of 10 proprietors representing 9/11 transferred to Chellathurai Ramasamy 2 March 2010 Chellathurai transfers 9/11 to Poobalan Thabaguram 5 April 2010 Poobalan Thabaguram transfers 9/11 to D3 and D4 D3 and D4 hold half undivided shares in the property 2 March 2010 Chellathurai transfers 1/11 to Jeevaji Ganaesan 5 April 2010 Muniswaran transfers 1/11 to D3 and D4 Sadasivan Muthu v Ramasamy Amaippan 7 19. Section 340 of the National Land Code is set out below for ease of reference: 340 Registration to confer indefeasible title or interest, except in certain circumstances

The title or interest of any person or body for the time being registered as proprietor of any land, or in whose name any lease, charge or easement is for the time being registered, shall, subject to the following provisions of this section, be indefeasible.

The title or interest of any such person or body shall not be indefeasible—

in any case of fraud or misrepresentation to which the person or body, or any agent of the person or body, was a party or privy; or

where registration was obtained by forgery, or by means of an insufficient or void instrument; or

where the title or interest was unlawfully acquired by the person or body in the purported exercise of any power or authority conferred by any written law.

Where the title or interest of any person or body is defeasible by reason of any of the circumstances specified in subsection (2)—

it shall be liable to be set aside in the hands of any person or body to whom it may subsequently be transferred; and

any interest subsequently granted thereout shall be liable to be set aside in the hands of any person or body in whom it is for the time being vested: Provided that nothing in this subsection 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.

Nothing in this section shall prejudice or prevent—

the exercise in respect of any land or interest of any power of forfeiture or sale conferred by this Act or any other written law for the time being in force, or any power of avoidance conferred by any such law; or

the determination of any title or interest by operation of law.

On the facts of the present case, two separate considerations arise: fraud and forgery. They are addressed in turn in the following paragraphs. Sadasivan Muthu v Ramasamy Amaippan 8 Fraud 21. The facts of this case incontrovertibly showed that Poobalan Thabaguram was a phantom. No person existed bearing that name with the identity card number set out in the Forms 14A.

The plaintiff exhibited a letter dated 24 January 2019 from the National Registration Department confirming that the identity card number 781101-14- 6079 purportedly belonging to Poobalan had never been issued by the department.

Accordingly, the title that had been issued to Poobalan was defeasible by reason of section 340(2)(a) of the National Land Code. The inescapable conclusion from the fact that the identity card number did not exist must that that the person purporting to be Poobalan was privy to the fraud by means of which the 9/11 undivided share in the subject property was transferred to him from Chellathurai.

The next question would be, were the titles obtained by the third and fourth defendants in the subject property defeasible, or could they avail themselves of the protection under the proviso to section 340(3) accorded to bona fide purchasers for valuable consideration?

The answer would depend on whether the third and fourth defendants were immediate purchasers, or subsequent purchasers of the subject property. The law in this regard is well settled: the title of an immediate purchaser is defeasible, and such a purchaser cannot avail himself of the protection accorded under the proviso to section 340(3).

That an immediate purchaser will not be able to avail himself of the protection accorded to a bona fide purchaser for value was explained by the Federal Court in Kamarulzaman Omar v Yakub Husin1 in the following terms: Whenever a registered title or interest is sought to be set aside under s. 340, first ascertain whether the title or interest under challenge is registered in the name of an immediate purchaser or a subsequent purchaser. If the title or interest is registered in the name of an immediate purchaser, the bona fides of the immediate purchaser will not offer a shield of indefeasibility. The title or interest of an immediate purchaser is still liable to be set aside if any of the vitiating elements as set out in s. 340(2) has been made out. If the title or interest is registered in the name of a subsequent purchaser, then the vitiating elements in s. 340(2) would not affect 1 [2014] 1 CLJ 987 Sadasivan Muthu v Ramasamy Amaippan 9 the title or interest of a bona fide subsequent purchaser. The title or interest of a subsequent purchaser is only liable to be set aside if the subsequent purchaser is not a bona fide subsequent purchaser. The title or interest acquired by a subsequent purchaser in good faith and for valuable consideration, or by any person or body claiming through or under such a subsequent purchaser, is indefeasible.

The question was thus whether the third and fourth defendants were immediate or subsequent purchasers. If they were immediate purchasers, then their title would be defeasible even if they had acted bona fide, paid full value for the property and possessed no notice of the prior fraud.

The Federal Court in He-Con v Bulyah Ishak2 explained how to determine whether the purchaser was an immediate purchaser or a subsequent purchaser. In that case, the issue arose whether AmBank (M) Berhad, which held a charge over a property that was registered in the first defendant’s name but had earlier been sold to the plaintiff, was an immediate or subsequent purchaser. The Federal Court ruled that AmBank as chargee was immediate purchaser, stating: [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. [Emphasis added]

Thus the titles of the third and fourth defendants in the subject property were defeasible, because they had dealt directly with the rogue Poobalan or a person purporting to be him. They were immediate purchasers, and could not avail themselves of the proviso to section 340(3) of the National Land Code to show that they were bona fide purchasers who had provided valuable consideration and accordingly that their titles were indefeasible. The plaintiff’s claim for the return of 1/11 of the subject property must be allowed.

For these reasons, I was of the considered view that the titles of the third and fourth defendant to the remainder of their undivided shares in the property was similarly defeasible. This was because the shares purchased by them from the three vendors were for an undivided part of the entire subject property, which meant that the impugned transaction with Poobalan for 9/11 of the subject property infected the remaining shares too. However, unless and until a prior 2 [2020] 7 CLJ 271 Sadasivan Muthu v Ramasamy Amaippan 10 registered proprietor or beneficial owner comes forward to claim their undivided shares as the rightful owner of the undivided shares in question, the title of the third and fourth defendants to 10/11 of the subject property would remain valid. “Defeasible” meant that their titles were capable of being defeated or set aside. Until those titles were set aside by the rightful owner, their titles should remain. It has to be remembered that the plaintiff did not claim to be entitled to the whole of the subject property, and hence was not entitled to set aside that portion of the title that did not relate to his share in the subject property.

The reasoning above would have been sufficient to dispose of the plaintiff’s claim against the third and fourth defendants. The issue of whether the third and fourth defendants have discharged the burden of proving that they were bona fide purchasers for valuable consideration did not arise, because they were not subsequent purchasers for the purposes of the proviso to section 340(3) of the National Land Code 1965. Nor would it be necessary for the plaintiff to establish fraud against the third or fourth defendants. That the person purporting to be Poobalan was a rogue was established through undisputed documentary evidence. The third and fourth defendants had dealt directly with Poobalan, and thus they were immediate purchasers, and did not obtain indefeasible titles.

There was nonetheless a second reason why the plaintiff ought to succeed in his claim. This is addressed in the following paragraphs. Forgery 33. In the following paragraphs, I explain that the creation of a fictitious proprietor amounted to an act of forgery within the meaning of section 340(2)(b). In addition, the use of a non-existent identity card also constituted forgery. For both these reasons, the titles obtained by the third and fourth defendants were defeasible at the instance of the plaintiff.

It is sometimes said that forgery is a specie of fraud. While this is undeniably correct, it is perhaps more correct to state that forgery is one of the means by which fraud may be perpetrated.

What is forgery? Vernon Ong J (later FCJ) in the High Court case of Mohd Nasir bin Moidu v Lee Swee Kim3 adopted an explanation of the term in Judith 3 [2011] 7 MLJ 606 Sadasivan Muthu v Ramasamy Amaippan 11 Sihombing’s The National Land Code – A Commentary, and I can do no better than to reproduce the relevant passage here: Forgery involves the dishonest misuse of the name of the registered proprietor (or of a party seeking without fault to take from the registered proprietor) or of factors relevant to the transaction where the name, details, or other information of the party are counterfeited by a rogue or someone intending to act dishonestly in so counterfeiting the signature and also usually intending to achieve some benefit for himself.

On the facts of this present case, it is clear by this definition that the first transfer from Sadasivan the plaintiff to Chellathurai on 29 December 2009 had been effected on the basis of a forgery, as the person who had signed the Form 14A had assumed the identity of the true proprietor, Sadasivan. It is also abundantly clear from the undisputed documentary evidence that Poobalan Thabaguram did not exist. The question therefore is this: does the interposition of a fictitious proprietor in the chain of title amount to a forgery?

In my judgment, the creation of a fictitious transferee is in itself sufficient to constitute a forgery. I find support for this conclusion in the Privy Council case of Gibbs v Messer4. That case was an appeal from Victoria, Australia concerning a mortgage that had been created under a Torrens system of registration. Mrs Messner owned parcels of land in Hamilton, Victoria. She had granted a power of attorney to her husband, granting him power to dispose of the lands. The title to the lands and the power of attorney were entrusted to her solicitor, Cresswell. Cresswell forged Mr Messner’s signature and transferred the lands to a fictitious person named Hugh Cameron. Cresswell then purported to act as Cameron’s agent and obtained a loan from the McIntyres with the lands as security. The McIntyres registered their security interest over the lands. Subsequently, the Messers discovered the fraud. In the following passage, the Judicial Committee explained that the act of registering the lands in the name of a fictitious person amounted to an act of forgery: The truth is that Hugh Cameron was in no sense an alias of Cresswell's, but a fiction or puppet created by him, in order that it might appear to be an individual having a separate and independent existence. The reasoning of the learned Judges fails to appreciate the difference between these two things. If Cresswell had, as they say he did, "assumed” the name of Hugh Cameron, and had used it fraudulently, he would not have been a forger. His fraud, in that case, would have lain in the representation that Hugh Cameron was his own designation, and he would, no doubt, have been amenable to the criminal law, in respect of such fraud. But, in first registering a 4 [1891] AC 248 Sadasivan Muthu v Ramasamy Amaippan 12 fictitious Hugh Cameron as proprietor of the land, and then executing and delivering a mortgage in the name of Hugh Cameron, Cresswell represented the mortgagor to be a person other than himself, and committed the crime of forgery. The real character of the criminal acts perpetrated by Cresswell differs in no respect from what it would have been, had Hugh Cameron been a real person, whose name was put upon the register by him, and used by him in a forged deed creating an incumbrance.

Reverting to the facts of the present case: the phantom Poobalan had acquired 9/11 of the subject property from Chellathurai, and this share was then subsequently transferred to the third and fourth defendants by Poobalan or a person purporting to be him on 5 April 2010. The creation of this fictitious person was tantamount to a forgery, on the authority of Gibbs v Messer. The titles of the third and fourth defendants were thus defeasible under section 240(2)(b), as their registration had been obtained by way of the forgery.

Separately and independently of my finding in the preceding paragraph, I am also of the view that the use of a non-existent identity card was also sufficient to constitute forgery for the purposes of section 240(2)(b), and hence the titles obtained by the third and fourth defendants were defeasible at the instance of the plaintiff.

Unlike the case for fraud, it was not necessary for the plaintiff to show that the third and fourth defendants were complicit in the forgery in order for their titles to be rendered defeasible.

The evidential burden of proving forgery lay with the plaintiff, and proof is on a balance of probabilities. I was satisfied based on the evidence adduced at trial that the case for forgery had been made out. Conclusion 42. In summary, the titles obtained by the third and fourth defendants were defeasible at the instance of the plaintiff because:

the person purporting to be Poobalan was privy to the fraud by means of which the 9/11 undivided share in the subject property was transferred to him from Chellathurai. This meant that the title registered in the name of Poobalan was defeasible by reason of section 340(2)(a) of the National Land Code. Because the third and fourth defendants had dealt with the person purporting to be Sadasivan Muthu v Ramasamy Amaippan 13 Poobalan, they were immediate purchasers and did not obtain indefeasible titles to the subject property;

the creation of a fictitious proprietor amounted to an act of forgery within the meaning of section 340(2)(b). The third and fourth defendants had obtained title to the subject property by means of this forgery, even if they were not complicit in the act of deceit; and

independently of the finding in paragraph (b), the use of a non-existent identity card constituted forgery for the purposes of section 240(2)(b). The Counterclaim 43. The counterclaim had been premised on the private caveat having been wrongfully entered by the plaintiff. As I have allowed the plaintiff’s claim, it must necessarily follow that the counterclaim was dismissed. Orders 44. There were orders as follows:

the plaintiff was declared to be registered proprietor of 1/11 of the subject property;

the fifth defendant was directed to register the plaintiff as such;

the plaintiff’s claims for damages against all the defendants were dismissed;

the counterclaims by the third and fourth defendants was dismissed;

the parties were directed to bear their own costs; and

the parties were granted liberty to apply. Sadasivan Muthu v Ramasamy Amaippan 14 8 August 2024 Azizul Azmi Adnan Judge High Court Seremban For the plaintiff: Mr M Manoharan—Messrs M Manoharan & Co For the first and second defendants: Mr Daniel Siew—Messrs Lee Kuan Mang & Co For the third and fourth defendants En Azmi bin Abdoll Aziz—Messrs KF Wong & Lee For the fifth defendant Puan Roziaton binti Mohd Nordin—Assistant State Legal