LANDMARK RULING ON SABAH NATIVE LAND

A NATIVE land case in Sabah that has dragged on in the courts for the last 20 years, the plaintiff passing away in the process, has finally come to an end in the Federal Court and opened the floodgates on thousands of similar cases in the state. The verdict was in favour of the native plaintiff, substituted by his daughter, against a non-native.

The Federal Court, in a landmark decision, has upheld a Court of Appeal decision that a bank is duty-bound to go beyond the Land Office register in matters that involve native land in Sabah.

Ascertaining the legality of ownership will avail itself of the protection given to a bona fide charge, the Federal Court further upheld.

The Federal Court's decision arose from two related questions of law which were referred to it. The resort to the Federal Court followed the granting of leave by the Court of Appeal on April 28, 2008 to International Bank Malaysia Bhd formerly known as Hock Hua Bank (Sabah) Bhd.

Federal Court Justices James Foong Cheng Yuen (left), Raus Sharif and Heliliah Mohd Yusof unanimously dismissed with costs an appeal brought by the bank against a decision of the Court of Appeal on Sept 17, 2007.

The Court of Appeal unanimously upheld a Kota Kinabalu High Court declaration on June 29, 2000.

REINSTATED AS OWNER

In the declaration after a full trial, the KK High Court ruled that Balantai Sinangau be reinstated as the registered owner of Native Title No. 213044378 measuring five acres in Kampung Nosoob, Penampang, Kota Kinabalu. Further, the Court ruled that a memorandum of transfer and memorandum of charge created for the land by Yeo Kee Seng, a non-native, and two other defendants be deleted from the Land Office register.

Balantai had contended that Yeo had become the “owner” of the land by way of a Power of Attorney, which he revoked earlier, and furthermore the latter was not a native. Therefore, the alleged transfer of the land to Yeo was null and void and consequently the charge created by Yeo in favour of the bank was therefore a nullity, Balantai pleaded.

The bank contended that Yeo, as owner of the land, had charged the native land to the bank to secure banking facilities and that the bank was at all material times acting as a bona fide charge of the native land. The land had been charged to the bank for a RM100,000 loan facility 20 years ago.

The bank had intervened and become a party to the suit after Balantai, subsequently substituted by his daughter Lovintih Balantai @ Betty after his death, sued Yeo and the two other defendants for the return of the land.

BANK SHOULD HAVE SUSPECTED YEO

In the 92-page grounds of the decision, delivered by Justice Mohd Ghazali Mohd Yusof sitting with Justice Mokhtar Sidin and Justice Abdul Wahab Patail, the Court of Appeal held that in a transaction involving the native title to be charged, the bank should have been put on guard that Yeo may not be a native and hence his position as a registered owner is suspect.

It said that this should have prompted the bank to seek legal advice from their solicitors to request from Yeo additional proof of ownership. The Court of Appeal cited as an example a copy of an appropriate declaration made by a Native Court pursuant to Section 2 (3) of the Interpretation Ordinance. However, Yeo did not furnish any evidence to show that he was a native, the Court of Appeal noted.

The Court of Appeal further held that, in the absence of any evidence to show that Yeo was a native, the High Court was correct in holding that the transfer of the native title to Yeo and the charge created by Yeo were a nullity by virtue of Section 17 (1) of the Land Ordinance. The Ordinance expressly states that all dealings in native land between non-natives and natives are extremely forbidden and no such dealings shall be valid or shall be recognised in any court of law.

The Court of Appeal ruled that the bank could not claim to be a bona fide charge as the bank had admitted at the trial that their solicitors had only conducted a search of the native title at the Land Office after the memorandum of charge had been lodged and registered.

NOT QUITE RIGHT

The Court of Appeal said that the search conducted on native title revealed past and present caveats, as acknowledged by the bank, and that should have alerted and put the bank on guard that something was not quite right.

It added that this should have prompted the bank to seek further legal advice from their solicitors to obtain additional proof of ownership relating to the native status of Yeo.

The Court of Appeal said that the bank must have knowledge of the restrictions in dealings over land held under native title pursuant to the land laws of Sabah. Hence, they cannot come to court and claim that the title to the said land is a clean title and maintain that they are a bona fide party of value without notice upon registration of a land dealing and indirectly ignoring the law relating to native lands in Sabah.

In the circumstances, the Court of Appeal held that the bank cannot be said to be acting bona fide, and therefore, the registration of the memorandum of Charge upon the Land Office register was a nullity.

By: JOE FERNANDEZ (sabahkini)