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Oh Hiam v Tham Kong [1980] 2 MLJ 159

Equity operates in personam in registered land systems.

Facts:

The appellants owned land in Malaysia. Six plots were in rubber growing land, while another in a village contained a house. The appellants sold these plots of land to the respondent. However, they had only intended to sell the six plots of rubber growing land, not the plot with the house on it. Malaysia used the Torrens system of registered land. The appellants sought rectification of the register against returning the price paid for the plot with the house. At first instance, the judge found in their favour. However, on appeal it was held that the Torrens system gave indefeasible title to the registered title holder in the absence of fraud.  The appellants appealed to the Privy Council.

Issues:

The appellants argued that the contract was worded so that it was evident they had not intended to part with the plot of land containing the house. However, it was also argued that the Torrens system meant that as the purchaser now had an indefeasible title under the registered land system, it was impossible to undo the sale based on common mistake.

Held:

Neither party had known what the other had intended. Therefore, the doctrine of common mistake rendered the transaction void. The Torrens system did not prevent the equitable remedy of rectification as Equity operated in personam. Lord Russell said (at para 9454):

indefeasibility of title does not interfere with the ability of the court, exercising its jurisdiction in personam, to insist upon proper conduct in accordance with the conscience which all men should obey.

Consequently, the court ordered rectification and a refund of the price of the village plot.


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