Section 340(2) 1. Fraud/fraudulent misrepresentation 2. Registration obtained by forgery 3. Registration obtained by insufficient or void instrument 4. Unlawfully acquired title or interest
Must prove 3 elements of fraud: 1. “Actual fraud” 2. The RP whose title is to be defeated must be party or privy to the fraud. 3. Intention to cheat.
“dishonesty – a willful and conscious disregard and violation of the rights of other persons” – Waimiha Sawmilling Co. Ltd  NZLR 1137
FederalCourt: there must be actual fraud to defeat a person of his title or interest. Cited Assetts v Mere Roihi: “fraud in actions seeking to affect a registered title means actual fraud, a dishonesty of some sort, not what is called constructive or equitable fraud”
Developer sold houses to purchasers. Charged the land to appl. Defaulted in payment. Appl applied for an order for sale of the land. Purchasers opposed. Argued that appl had failed to make inquiries before executing the charge. If the appl had make proper inquiries, they would have found out that the houses on the land had been sold to the purchasers.
High Court: Appl had constructive notice of the purchasers interest in the land. Its demand for sale of the land constituted fraud on the purchasers. However, Fed Court: there must be actual fraudto defeat title or interest.
Requirement laid down in section 340(2)(a). In Assets v Mere Roihi, Privy Council: “The fraud must be brought home to the person whose registered title is impeached or to his agents”.
Tara, RP, lived on the land with husband Devan and 5 children Devan’s brother, Dr. Das, obtained a loan from Hong Kong and Shanghai bank in Singapore to obtain a loan for his computer medical centre. Dr Das consulted Devan who persuadedTara to put up the land as security for the loan.
Jagindar, a lawyer, was a guarantor for the loan. He and his friends, Suppiah and Arul, went toTara’s house and asked her to signed a few documents. They misrepresented toTara that the security was to be effected by a transfer.
Without knowing it,Tara had transferred her land to Suppiah and 18 days later he transferred it to Arul. Later, the land was transferred to a developer company belonging to Datuk Jagindar. The land was subdivided and sold to various purchasers.
Held: There was fraud to defeat Suppiah’s title, Arul’s title and the developer company’s title. However, the purchasers titles could not be defeated since they were bona fide purchasers for value without notice of the fraud.
Goh HooiYin v Lim “it is not enough to show that the transfer had the effect of depriving the plaintiff of a known existing right. It must be demonstrated that the transfer was executed with the intention of cheating the plaintiff of such right…”
--beyond reasonable doubt (Saminathan v Pappa) Note: onus to prove forgery is only on a balance of probability
Other cases on fraud: OweThen Kooi 1990 1 MLJ 234 Nallammal v Karuppanan 1993 4 CLJ 454
Forgery is the creation of a false written document or alteration of a genuine one, with the intent to defraud. Although it is a species of fraud, under the NLC, forgery is not the same as fraud. The requirements are different. No need to prove that the RP is party or privy to the forgery.
Forgery relates to the instrument of transfer. Forgery invalidates the instrument of dealing. Focus is on the instrument, and not act of the parties. The instrument becomes a defective instrument of dealing.
Court of Appeal: “A registration obtained by forgery is of no effect…it is clear that there can be no registration without an instrument. Hence, one of the ways in which to defeat a registration is by impugning the very instrument of transfer by means of which the registered proprietor obtained his title. If the instrument was forged or by other reason was insufficient or void, the title of the registered proprietor may be set aside.”
Mrs. Messer (the RP) executed a POA to her husband, Mr. Messer, with power to transfer the land. Both of them left the country and left the title in the custody of a solicitor, Mr. Creswell. Creswell forged Mr. Messer’s signature and transferred the land to a Mr. Cameron (a fictitious person).
Creswell posed as an agent of Messer and presented the transfer for registration. The transfer was registered. He then posed as an agent for ‘Mr. Cameron’, who was now the RP, and created a mortgage over the land. When Mrs. Messer returned, Creswell absconded.
Mrs. Messer brought an action for an order to cancel the certificate of title in the name of Mr. Cameron and for the issuance of a new title free from the mortgage. Messer “Cameron” (fictitious person) Mortgageetransfer mortgage forgery
Issue: Whether Mrs. Messer could defeat the mortgage on the grounds of forgery. Held: The mortgage was invalid due to forgery
Mr. Frazer Radonskis Walkermortgage transfer forgery
The Court held in favour of immediate indefeasibility The title of the Radonskis was an indefeasible title from the time of registration. Even though the mortgage was a void document at common law, it did not affect the indefeasibility of their title.
The Court’s decision in Frazer vWalker did not overrule Gibbs v Messer but distinguished it on the basis that Gibbs v Messer involved a fictitious person.
Balance of probabilities -- Federal Court Adorna Properties 2001 (Note: Beyond reasonable doubt --High Court in Adorna Properties 1995)
Other circumstances where registration is obtained by a defective instrument of dealing: It was signed by a minor It was signed under an invalid POA Insufficiently stamped Not attested Effect:The instrument becomes void/voidable
If immediate indefeasibility applies, registration cures the defect. The new RP obtains an indefeasible title even though a defective instrument was used. If deferred indefeasibility applies, the title of the RP is open to attack (defeasible) until it is transferred to a subsequent transferee who is a bona fide purchaser for value without notice of the defect.
The Registrar had rejected the instrument of transfer as it was signed by the transferor under an invalid power of attorney. The transferee (appellant) appealed claiming to be entitled to indefeasibility. The appeal was dismissed. There was nothing registered in favour of the appellant.
This case shows that Malaysia applies deferred indefeasibility. Even if the transfer had been registered, the court would still hold that the appellant’s title is defeasible due to the invalid POA.
Two instruments of transfer executed by a minor. Held: the transfers are void
Court: An instrument of dealing signed pursuant to an invalid or insufficient power of attorney is reagrded as an ‘insufficient or void instrument’.
Charge registered in breach of a restriction in interest. Court: title of the chargee was defeasible.