Jual-janji and Harta Sepencarian, how are they interacting with indefeasibility of title? Are they exceptions to indefeasibility?
As we all know indefeasibility of title is a commonly asked question in D10 Laws relating to property. One of the areas which is asked is case law, Adorna Properties which was over-turned by Tan Yin Hong 2001. Further readings on Tan Yin Hong here. and judgment by Chief Justice of Malaysia Zaki Tun Azmi (as he then was) here. These were Federal Court cases heard.
However, the issue with indefeasibility being overturned could happen in 4 conditions summarized below (D10 2017 Q5) which is provided by NLC.
Section 340 (2) of NLC 1965 provides several exceptions to indefeasibility of title. This means the registered title or interest may be open to attack.
- In case of fraud or misrepresentation to which the person or body, or any agent of the person or body, was a party or privy;
- Where a registration was obtained by forgery, or by an insufficient or void instrument;
- Where the title or interest was unlawfully acquired through purported exercise of any power or authority conferred by law.
- By 'operation of law'
The part of "operation of law" needs further explanation as earlier answers were too convoluted. The below two scenarios are given to simplify explanation of "operation of law".
The Customary Laws (Adat) and Islamic Laws - jual-janji and harta sepencarian.
This is also able to explain why NLC 1965 is NOT followed in certain circumstances - as in S.4 of the NLC referred here.
What is jual-janji?
It is "Sale of land under customary law" - page 97 of Salleh B. "Malaysian Torrens System" extracted below:
The customary transaction know as jual janji which was prevalent amongst the Malays since the turn of the last century as observed by Maxwell in his treatise has the dual attributes of both a sale transaction as well as a security transaction. When time is still running and the right of the seller (borrower) to repurchase the land from the buyer (lender creditor) is still subsisting, the customary transaction of jual janji is to all intents and purposes a security transaction, but when the time to repurchase has expired, the transaction of jual janji becomes jual putus. In such a case, the transaction between the seller and the borrower had acquired the character of an outright sale and not just a mere security transaction.
Thus, when the title is not in the creditor-lender's name, the title which is still in the original owner's name (the borrower) - without any lien, charge, caveat or any registration in the title of land available then - despite the sale being transacted and that the option to repurchase had expired - the indefeasibility of the title is in question (meaning subject to claim by creditor) as the land had been "SOLD!".
Through many years and many judges' decisions, this kind of jual-janji indeed resulted in a rightful claim of ownership by the creditor-lender because in local customary law and Islamic law, it was a transacted deal, no less.
Hence, the name in the register could be challenged by customary law - which is "by operation of law" and the title therein thus NOT "indefeasible".
Another situation is harta sepencarian.
Page 211 of Salleh B. "Malaysian Torrens System" has the whole chapter 9 on this subject of Harta Sepencarian. Indeed, it is about Islamic family law. A quick summary is as below.
When a couple got married, the Islamic law put the immovable properties under either Harta Syarikat or Harta Sepencarian. Although the land title may carry only the name of one of the spouses (usually the husband), it being acquired after marriage means the other spouse has rights to claim ownership. A lot of time, it become a matrimonial claim during a divorce. At times, after the holding party has died and the living widow or widows claiming the estate.
Therefore, the indefeasibility of title is challenged here that local practice of harta sepencarian - a customary practice in Islamic law provides avenue of the other spouse - wife to claim equal share (or less - 1/3) despite the title only bearing one name (of the husband). In this scenario, the named party - and him alone, is not indefeasible, as the customary law provides for the living wife, or other widows included to claim ownership (one-half to 1/3).
Hence, in the wide interpretation of "by operation of law", any claims arising out of contract (jual janji) or customary law (marriage and divorce), any type of termination of title or interest effected by law recognised in Malaysia (s.4 of NLC included) would amount to further exceptions to indefeasibility of title. This would include judicial decisions on jual janji as well as harta sepencarian (page 175, Principles of Malaysian Land Law)
Buang, Salleh. (2007) Malaysian Torrens System. 2nd Ed. Chapter 6 - Sale of land under customary law. Page 97.
Zubaidah, Sharifah (2008) Indefeasibility of title and interests. Chapter 5. Principles of Malaysian Land Law. LexisNexis. Page 174-175.