Friday, November 21, 2014
Dear land owners, your may not having an indefeasible title, despite you have conducted land searches and found no encumbrances.
In a recent case Ishmael Lim bin Abdullah @ Lim Keng Chew v Pesuruhjaya Tanah Persekutuan & Pentadbir Tanah Gombak, the Court of Appeal ruled that the land owner would have to pay for his own price due to negligence committed by the land office. Subsequently, Ishmael Lim attempted to knock the door of Federal Court but failed. The Federal Court rejected his application for leave as his application failed to meet the threshold in persuading the Federal Court that his case is a good case that involving public interest.
I have no liberty to read the relevant cause papers. Subject to the crafting of grounds of appeal, I think the Federal Court has relinquished a good opportunity to make ruling on some important legal principles, leaving the Court of Appeal’s judgment as a dangerous precedent in the context of land law especially the question of indefeasible title in Ishmael Lim’s case.
Brief Facts of the Case
The First Land Owner (“A”) – Transferor
The Second Land Owner (“B”) – Transferee
The Third Land Owner (“C”) – Son of Transferee
1973, Gombak Land Office issued a notice of acquisition to A, informed him that the government acquired his land for the purpose to construct a military college. A was aware of the proposed acquisition, compensation had been deposited into court at that time.
1975, A transferred the land to B, to which consideration not specified in the judgment. The transfer went through.
1986, the land was realienated by the state government and land office had issued a new title to Pesuruhjaya Tanah Persekutuan, for the purpose to construct the military college.
1992, C inherited the land from B. The transfer of the land managed to go through despite the realienation.
Thereafter, Gombak Land Office issued notice to evict C from the land as the land office claimed that the land had been acquired previously. C tried to claim the current market value of the land amounted to RM1.5 million but failed. According to Court of Appeal, the offer made in 1975 is still valid. As such, C only can get approximately RM6,000 as compensation, instead of RM1.5 million.
What the Court said?
In short, the failure of Gombak Land Office to endorse/register the acquisition would not affect the acquisition, as the Court of Appeal ruled that it was just a mere formality to do so.
So, if state government acquires your land, and yet the land office fails to endorse a memorial in your title, it is irrelevant. The land could have been sold to many purchasers, but you could still loses your land.
Due to the omission of land office in endorsing the acquisition in the title, land search would not reflect the memorial of acquisition. You could be purchasing an encumbered land without knowing the encumbrance at the expense of the land office’s default.
The Court of Appeal addressed the effect of the Notice of Acquisition at the first instance rather than the procurement of indefeasible title of a bona fide purchaser. According to Court of Appeal, the cut off time is quite clear and simple. Once the Notice of Acquisition had been issued, the land owner will no longer holding a good title. This explains why B could not acquired an indefeasible title from A.
This is what I believe. I think the rationale in deciding the endorsement of the acquisition in the title is a mere formality is largely motivated by public policy consideration. Whilst I agree that any land could be acquired by the state government under National Land Code subject to adequate compensation, Ishmael Lim should not be made liable for the mistake done by the land office. I also agree that it is now useless to rely on land search solely.
It would be wise to trace back to the previous transfer records and/or owners in order to secure the defeasibility of the title, should any prospective purchaser wishes to purchase a land.
In my point of view, strictly speaking, the Court of Appeal appeared to be wrong in deciding the requirement to endorse the acquisition of memorial is just a mere formality. It could be used as a tool to abuse the land owners.
In a further note, it must be pointed out that the Federal Court should not reject the leave application as the case involved important legal principles to be addressed by the apex court in the land. The issue of whether the requirement to endorse the acquisition memorial in the title deed is a mere formality or a compulsion remains to be addressed by the apex court, in which to no avail at this moment.
Ishmael Lim lost his land on 3 expenses:-
To conclude, I would think that the Gombak Land Office bears 3 counts of charges:-
i. Gombak land office failed and/or omitted to endorse the memorial of acquisition in the title, rendering land search useless at all material time to discover any encumbrances;
ii. Gombak land office inadvertently allowed the transfer from A to B to be went through, despite the existence of the Notice of Acquisition; and
iii. Gombak land office inadvertently allowed the transfer from B to C to be went through, despite the realienation by state government and issuance of new title.
Unless and until the relevant section of Land Acquisition Act is amended, Ishmael Lim’s case would stand as authority for the time being.
Further, the Selangor State Government should step in to redress Ishmael Lim. In view that the military college would not be erected on his land anymore, the state government should at least provide adequate compensation to Ishmael Lim. Justice must be done.