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Thursday, 14 February 2013

The duty of the Torrens Conveyancing Solicitors

Contributed by Ally Chong Wai Kuan

The public’s general view of a lawyer is divided into two, the court room lawyer and the office lawyer. The office lawyer are generally called by laymen as the “sale and purchase agreement solicitors” (“SPA’s solicitors”). This paper attempts to make an effort to educate the public that office lawyers are not the SPA’s solicitors, instead they are the officers of court who seek to educate, advocate and promote the Torrens principle of conveyancing and to ensure the “Torrens interest acquirer an  unchallengeable concept of indefeasibility statutory protection.

The Introduction

The land law in West Malaysia is governed by the National Land Code 1965.  This statutory Code is divided into twenty eight parts. Each part is then divided into different Chapters.

The Torrens system of registration has been welcomed by the public at large in Malaysia. The Torrens conveyancing system has made it to the world at large to identify the proprietary  interest holder of the property.

Prior to the implementation of the Torrens registration system, the land and property dealing in Malaysia was governed by the doctrine of the orthodox English common law deeds system. The common law deeds system involved dealing with an unregistered world, ie, the unregistered land system. If an interested party who wishes to acquire the land/property in the unregistered world, the interested party has to ensure that the lawful owner of the property is able to provide a complete set of contract derived from the State or Crown till the current lawful owner, wherein, it is like following the upper bank of the river up to where the water fall i, failing which there is no chain of the transaction.

The Predicament

This process of Common law deed of system was tedious and time consuming, more so if there is a break of chain in the middle of the searching or tracing the deceased owner on his  unsettle administration of effect issue and/or beneficiary, [i] It would also vest upon the lawful owner of the land/property to have a high degree of control and management of all these deed to enable the lawful owner to prove that he/his is the lawful owner of the land/property.

Though centuries, the deed system is not an ideal system of conveyancing of a land /property, , the deed system require a total control and monitor of all the conveyance of the land/property transactions and dealings.

The deed of conveyance itself does not conveyance deliver and grant of the statutory right for the lawful owner to transfer the title to the land/property to the interest intended holder, but merely assigning the contractual rights to own the land/property.

The Solution Offer
In order to do away the tedious trace of the ownership,  Sir Robert Torrens [ii] propound the idea of registration of title in South Australia in 1858.

The system of registration is based on the  mirror and curtain principle. As reflected by the word “mirror” which furnishes a self explanatory definition, any interested interest buyer will deal with the exact information derived from the certificate of title, which is more commonly known as the Registered Document of Title. Likewise, any interested interest buyer does not need to lift the curtain to search for the history of the dealing in the land/property.
The Recognition

The honourable judge, Lord Watson in Gibbs v Messer [iii] held that “….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.

The Endorsement

The registration of land/property system had made a tremendous reform for all the commonwealth counties in the globe at that time up to now. Even some parts of the States in the United States of America are endorsing the principle of Torrens registration system [iv].

This land/property reform has been codified and implemented into the land/property law in Malaysia, the National Land Code 1965.  The system of registration of land/property has been statutorised in our land law and honour indefensibility title to the registered proprietor.
Section 340 of the National Land Code 1965 provides for the concept of indefeasibility. This paper will focus principally on the vitiating circumstances of fraud and forgery which the cases deal with. It is proposed to set out below the relevant provisions pertaining to these two vitiating factors so as to better understand the discussion which follows. The relevant parts of the section read as follows:
“S 340(1) 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.
 (2)       The title or interest of any such person or body shall not be indefeasible
                       (a)   in any case of fraud… to which the person or body, or any agent of the       
                               person or body, was a party or privy; or
                       (b)  where registration was obtained by forgery,…;
(3) Where the title or interest of any person or body is defeasible by reason of any of the circumstances specified in subsection (2) –
            (a)     it shall be liable to be set aside in the hands of any person or body to whom it  
                    may subsequently be transferred; and
            (b)      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.
The Surety Certificate

The Torrens system of registration even offers the surety certificate. The evidentiary provision is provided in section 89 of National Land Code 1965.

 Section 89 Conclusiveness of register document of title

S89 every register document of title duly registered under this Chapter shall, subject to the provision of this Act, be conclusive evidence –

                 (a)   that title to the land described therein vested in the person or body from the time 
                        being named therein as proprietor.

                (b)   of the conditions, restrictions in interest and other provisions subject to which the   
                        land is for the time being held by that person or body, so far as the same are   
                       required by any provision of this Act to be specified or referred to in that 
                       document Torrens system of registration not only formulated a mirror and curtain 
                       principle, it assures and declares to the globe that Torrens system of registration  
                       is also offering surety (indefensibility of title) to the Torrens registered proprietor.

What is the rights of the Torrens interest intended acquirer ® , i.e. the Purchaser’s rights  prior to registration?

The Torrens registration system does not recognize the rights interest in the land/property prior to the registration. The Torrens registration system state, it is the act of registration that vest and divest the interest of the Torrens land/property to the Torrens intended interest acquirer [v].

The question arise as to what is the Torrens interest intended acquirer have in hand prior to the registration?

Yes, it is a contract of promise to sell and transfer the land/property from the Torrens registered proprietor to the Torrens interest intended acquirer, in the laymen term the Purchaser. A contract of a sale and purchase of a land/property transaction is merely an agreed contract between the Torrens registered proprietor and the Torrens interest intended acquirer. The Torrens registered proprietor promise to transfer the Torrens title to land/property to the Torrens interest intended acquire, and the Torrens interest intended acquire promise to take the title  with a lawful consideration [vi].

This contract of sale and purchase does not itself give rise to power or any statutory authority for the Torrens registered proprietor to transfer his/her land to the Torrens interest intended acquire. What the Torrens registered proprietor have then? He/she only have the power to sell his/her land/property to the Torrens interest intended acquire, he/she promises to sell the property to the purchaser.

In a Privy Council case, the Judicial Committee in the case of Haji Abdul Rahman v. Mohamed Hassan, [1917] [vii] held that an agreement, not in registrable form, to transfer back certain land upon a certain contingency happening, while ‘valueless as a transfer or burdening instrument,’ (p. 215) was good as a contract. The JC, held that (the agreement) it was not an ‘attempt to transfer, but a conditional promise to transfer.’ (p. 214).

In order for the Torrens registered proprietor to transfer the land/property to the Torrens interest intended acquire, a statutory prescribed instrument of transfer is required [viii]. This statutory creature is recognized by law to facilitate the registration of the Transfer, not the sale and purchase agreement.

In a New Zealand case, Orr v Smith [ix], the Plaintiff brought an action against the assignee of the reversion who had re-entered the property for no payment of rent. However, the rent had been paid to the registered proprietor. Hosking J  held that “…S112 (1) of the Property Law Act 1952 dies therefore seem to enable amongst other a complete equitable assignee or beneficiary under a bare trust to recover rents. It does not however in my opinion, deprive the legal owner of this right. I think it merely confer collateral rights of the beneficial owner”   Hosking J went on to clarify that until registration the unregistrered instrument does not bind the land.
Back to the home land, Lord Diplock in Eng Mee Yong & Ors V. Letchumanan [x] held that “The Torrens system of land registration and conveyancing as applied in Malaya by the National Land Code, has as one of its principal objects to give certainty to title to land and registrable interests in land”.

Further S78(3)  of the National Land Code provide “ the alienation of State land shall take effect upon the registration of a register document of title ...” It is the act of registration that confer indefeasibility of title, it is not the approval of the alienation but the act of registration as propounded in Dr Ti Teow Siew & Ors V Pendaftar Geran-Geran Tanah Negeri Selangor [xi].

Which means, what the office solicitors do is to ensure Torrens interest intended acquirer acquires the statutory indefeasibility title, which mean no one in the word is able to challenge the title of the Torrens interest intended acquirer upon registration of his/her interest in the land. In Teh Bee V K Maruthamuthu [xii] the court held that under the Torrens System the registration is everything.

To ensure the Torrens interest intended acquirer to enjoy the statutory indefeasibility of title, the solicitors who are attending handling transact the land/property have to prudently exercise his/duty as the solicitors of court to ensure all rule and regulation, statutory requirements are complied with and adhered to. The statutory duty of the solicitors include inter alia, to prepare the statutory prescribed form in the manner and method as per the law, signatures of the Torrens registered owner and Torrens interest intended acquire have to be witnessed according to the law, prescribed registration fee is to make to the relevant land office/land registry office, more importantly, to up hold the principle and energy of Torrens system of registration.

[i] see Mac Donald, Mc Crimmon and Wallace, Real Property Law in Queenland (LBS Information Services 1998, SY Kok, The Torrens System and Equitable Principles),2011
[ii] Sir Robert Richard Torrens, (31 May 1814 – 31 August 1884) was the third Premier of South Australia and a pioneer and author of simplified system of transferring land.
[iii] Gibbs v Messer (1891) AC 248
[iv] Minnesota, Massachusetts, Colorado, Georgia, Hawaii, New York, North Carolina, Ohio, and Washington
[v] Tai Lee Finance Co. Sdn Bhd v. Official Assignee & Ors. [1983] 1 MLJ 81, Buxton & Anor. v. Supreme Finance (M) Bhd. [1992] 2 MLJ 481 ;  M & J Frozen Sdn  Bhd & Anor. v. Siland Sdn. Bhd. & Anor. [1994] 1 MLJ 294;  Perwira Habib Bank (M) Bhd. v. Bank Bumiputra (M) Bhd. [1988] 3 MLJ 54
[vi] Should the title to the land/property fail to confer indefeasibility of title to the Torrens interest intended acquire, then by virtue of the Contract Act 1960, he/his is entitled to initiate a specific perform by filling of this case in the court of law.
 [vii] AC 209. 1 FMSLR 290, 
[viii] See Part Fourteen S214 of the National Land Code 1965
[ix] Orr v Smith 41919 NZLR 818 at pp 828-829
[x] Eng Mee Yong v Letchumanan (1979) 2 MLJ 212
[xi] (1982) 1 MLJ 38
[xii] [1977] 2 MLJ 7  

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