See Leong Chye @ Sze Leong Chye v United Overseas Bank (Malaysia) Berhad & Other Appeals: A Forced Marriage of Original Proprietor and Subsequent Chargee

Abstract

Deferred indefeasibility is one of the most important concepts in the Malaysian Torrens System. Under the doctrine of deferred indefeasibility, when there exist vitiating factors in the immediate transaction, the immediate purchaser will acquire a voidable title in contrast with the subsequent purchaser who will acquire good title or interest if he obtains the title or interest in good faith and with valuable consideration. However, whether a purchaser is immediate or subsequent depends on the construction of section 340 of the National Land Code (Revised 2020). In 2021, the Federal Court laid down the decision of See Leong Chye @ Sze Leong Chye v United Overseas Bank (Malaysia) Berhad & Other Appeals which states that the financial institution which acquired interest from an immediate purchaser was a subsequent purchaser, thereby enjoyed indefeasibility in its charge. However, such an interpretation ran afoul of section 340 of the National Land Code. This article provides a commentary on the case of See Leong Chye in respect of the concept of immediate and subsequent purchasers under the doctrine of deferred indefeasibility.