Archive for January, 2015

On October of last year (2014), this blog hosted an article I wrote on how several public listed companies from Peninsular Malaysia have gained ”ownership” of Sabah’s Native Title lands through seemingly legal yet downright dishonestly via sublease (See here : Living off the Rape: The Lost Native Titled Lands to the Outlanders). After that very same post, the Director of Sabah Land & Survey Department Datuk Osman Jamal came out with a 14 page press statement -“Sub-lease Bukan Pindahmilik dan Rampasan Tanah Tidak Berlaku” (Sublease is not for Transfer and There is No issue of Land Grab) also found at I find it strange that Osman Jamal is somehow insinuating that dealing in NT Lands by non-natives, listed companies and foreigners are officially forbidden but is it suppressed?

This is not a case of bogus natives with questionable native certificates dealing in buying or selling NT lands. The dispute is also not about Natives selling to Natives but the constant abuse of Natives as “nominees” by non-natives, listed companies and foreigners in their pursuit to possess and “own” NT lands. It is indeed a cause for concern when the Sabah Law Association (SLA) appears to concur with the Director of Sabah Land & Survey Department on issues fronting the NT lands grab and the law through the Director’s 14 page press statement. What adds insult to injury here is at the time of writing, the SLA has yet to make a stand on the issue. This failure to issue a statement on the allegations of its member’s active role in drafting and attesting such agreements and on the contents of the press release from the Director of Sabah Land & Survey Department is nothing short of dumbfounding considering that the SLA has prided themselves for presumably being the protectors of justice for Sabahan without fear or favour, that they are always on their toes to bark against any such infringements especially against those involving Natives Rights.

In fact, the SLA’s silence on the issue is a clear defiance of the pillar’s of foundation it is founded on – they have to take all reasonable steps to educate the public on the reasons they have remained silent on the NT lands scam as reported in the Daily Express dated 18/10/2014. It is indeed cause for concern as the failure of the SLA shows how selective and biased they are in upholding justice and raises pertinent questions as to whether the association must now be reformed.

“Fraud” is defined as “criminal deception, devious ploy or trick” and therefore relates to any form of cheating. The main point before dealing with this issue is to emphasise that a problem which can generally be described as “assisting fraudulent activity” is not confined to being a party together with someone, abetting or advising someone on how to commit fraud but rather any illegal or improper activity. Professional accountability involves distinguishing how to balance the various duties owed by lawyers to the administration of justice, to the client, to the public and to the legal profession. Turning a blind eye to fraudulent activities often happens through ignorance or unsuccessful efforts to balance the various duties which a lawyer owes either because it is too difficult or it conflicts too much with “commercial realities”.

Sir L.W. Street, the former Chief Justice of the Supreme Court of New South Wales, in New South Wales v Harvey [1976] said of the *fiduciary nature of a solicitor’s duty to clients, “An appreciation of that duty depends not upon some technical construction but upon applying the ordinary concepts of fair dealing between honourable men.” Hence, the Director of Sabah Land & Survey Department and District Officers (as ACLR) should exercise their duties in ‘good faith’, and in the absence of ‘bad faith’. ‘Bad faith’ raises issues both of fact and of law and involves personal fault and improper motive. Acting in bad faith can include dishonesty, fraud or intentional bias, acting in the knowledge of a real or perceived conflict of interests, inappropriate discriminating or an abuse of power, knowingly acting beyond the scope or ambit of the power available to the department or official or other conduct with an improper motive or ulterior purpose.

‘Good faith’ requires and implies an actual belief that all is being regularly and properly done and may be present even where the official has acted in error or irrationally. However, significant errors, repeated lapses in logical processes or an absence of reasonable caution or diligence may show a lack of good faith depending on context. Acting in good faith means that a function is performed honesty, for the proper purpose, on relevant grounds and within power. Good faith requires ‘more than an absence of bad faith. It requires a careful approach to the exercise of power’. Public officials such as the Director of Sabah Land & Survey Department and DO are under an obligation to exercise their power and functions in the public interest and not for the benefit of particular persons or interests. If members of the public are not able to understand a decision-making process or its outcome, they may question both the decision and ultimately the decision-maker including the influence of inappropriate or extraneous considerations. Public officials should also perform all their duties to the best of their abilities otherwise it would be considered breach of duty. A breach of official or public duty is distinguishable from a breach of a duty of care under tort (negligence) law. It incorporates unlawful, unauthorised or partial conduct or an intentional failure to perform a mandatory duty.

As the Director of Sabah Land & Survey Department rightfully pointed out in s17.(1) – Except with the written permission of the Minister all dealings in land between non-natives on the one hand and natives on the other hand are hereby expressly forbidden and no such dealings shall be valid or shall be recognised in any court of law. He should have pointed out that in s 4 – The word “dealing” means any transaction of whatever nature by which land is affected under this Ordinance. The Director of Land and Survey had acknowledged that in the Sub-lease procedures involving NT lands, 3 elements must be strictly complied – (i) Memo of sub lease in Sch. XVI Form filed, (ii) the required fees payed and (iii) the sub-lease Agreements between the Native owner and the sublessor. One can only assume that the Land & Survey Department had read and verified these Sub-lease Agreements especially on the fees and the duration period of the sub-lease BEFORE registration. The fact that the Sub-lease Agreements contains clauses that contravene the law, ie an extension of a lease for another 60 years (2X automatic extension) AFTER the initial 30 year sub-lease without any further payments, had been duly registered. The Director of Land and Survey stated that his department had never received any formal reports from Native Title holders saying their lands had been taken illegally or without their consent. He later went on to say that “No one who had sold their land to a third party who then sub-leased it to a private company had ever gone to court and said they had been cheated or that the sub-lease was without their consent”.

These poor native NT land owners have absolutely no idea how extensive the acreage owned by them or its location as no admission or information on neither these titles, sublease fees payments nor their own tax returns has ever been disclosed to them. The suppression of documentation, creation of illegal documentation and consequent making of a false declaration is not the result of any innocent error but a vital element in the furtherance of a scam by these Non Natives, foreigners and listed Companies. Moreover, NO sole bread winner for mouths to feed will ever snitch on their employees. Many Non Natives, foreigners and listed Companies who buy into NT property in Sabah are using the “nominee system” for both plantations, housing development projects and in some cases land speculation investment. This is where the Non Natives, foreigners and listed Companies buyer puts the NT title into the name of a Sabahan Native BUT clenches and hold on to these NT Titles.

The nominee system is actually very similar to offshore banking structure used in tax haven islands or even in Switzerland. If one dreams of ownership in NT land this is one way to retain it. Many Non Natives, foreigners and listed Companies have bought and sold NT lands this way. The Director of Land and Survey had refuted that rich people would do it. The rich appreciates the philosophy that generally in all aspects of life, greater risk equals greater reward. Wealthy people have the least concern about the system. They are already accustomed to this type of arrangement. They even like the fact that they have an asset that is not in their name which no one could ever take from them or even know about. It should be noted that over the last 10 years, people who have been bold enough to do this in Sabah have made huge profits. Land Subleased to these Non Natives, foreigners and listed Companies act conveniently as their insurance. It grants them a leasehold title for the next 30 years. If they have a problem with their Native nominee there is nothing these Natives would be able to do during that period and this is what that will secure the NT title properties. Even in the worst case scenario, if one has a problem with the Native nominee, the property is still theirs to enjoy as the sublease is locked in for a 30 year term and they could even sell these NT lands as a subleased property to others. (Remember the numerous blank escrow documents signed)

The Director of Land and Survey declared that sub-lease allows NT lands to be developed and the installation of infrastructures by the private company, such as roads, electricity and water, will add value to the land itself while at the same time still keeping the ownership of the land with the Orang Asal. “Once the sub-lease period is over, the land automatically reverts back to the NT title holder, along with all the added values”. The Director of Land and Survey did not clarify what happens if these lands were charged to maintain all these “development improvements” in these NT lands or what happens in the event these poor, uneducated employee Natives dies before the expiration of the 30 year sublease? How would the next of kin or family member know of the extensive ownership of these NT lands when the PPHT Offices itself refuses to reveal and even discourages these Natives queries and forbid them from obtaining photostat copies of the these NT land titles?.

The Director of Sabah Lands and Surveys Department further gave lessons on “Malaysian Contract Law” and claims it is “permissible” in the Contracts Act despite the Courts in Sabah having declared such form of arrangements as in the case of Borhill, Neway and in the groundbreaking Federal Court case of Balantai, as it is an abuse of s17 of the Sabah Land Ordinance on “dealings” as it is an Express Statutory Prohibition and is Forbidden. “Stop NT Land Deals via Nominees”, a statement by Clarence Bongkos had also substantiated that too many occurrences of non-natives and others from outside Sabah, especially from Sarawak, making use of local natives as nominees to acquire native lands in Sabah. The modus operandi is using employees to acquire the NT lands and hold it in trust through side agreements until such time the land is converted to Commercial Lease (CL) or dispose of after planting oil palm for a higher prize.  That’s why we can see Chinese from Peninsular Malaysia owning NT lands in Nabawan and thousands of NT lands in Pensiangan been transferred to non-natives. These revelations among many others cannot be all fictitious tales.

The Director had issued on Nov 7, 2014, another statement that that Native lands have title over it unlike the Malay Reserve Land (MRL) so Sabah Natives luckier than P”sula Malays. He should have checked the facts on Malay Reserve Land in the Peninsula Malaysia as it have many provisions and additional statutes protection that have to be referred and strictly complied when forming even just the sub-leases. The relevant statutes are: (i) National Land Code (Act 56 of 1965): Section 221 – 228A, (ii) Land Enactments 1897, (iii) MAS Land Rules 1950 (Amended 1954), (iv) Malay Reserve Enactment 1913: Section 17. A further safeguard provision in law for (MRL) is found in Federal Constitution Article 89(3) that envisages if any Malay Reserve Land is acquired or revoked, the state authority shall replace it with another piece of state land. There are 3 conditions which need to be adhered to for Malay Reserve Land’s replacement: (i). It has to be similar in character; (ii) An area not exceeding the area revoked and (iii) The replacement should be exercised immediately. Do the NT lands have such protections and safeguards as the Malay Reserve Land?

In law, the Freedom of Contract doctrine is not absolute and that all contracts and agreements should be consistent with the provision of Malaysian Contract Act 1950 and other laws. Factors which revoke such consent are coercion (s15), undue influence (s16), fraud (s17), misrepresentation (s18), and certain categories of mistake (s21,22 & 23) are simply examples of defective consent or restriction and will which render the resulting agreements invalid despite the rule on Freedom of Contract. All agreements are contracts if they are made by the free consent of parties competent to contract for a lawful consideration and with a lawful object. But it is possible for valid agreements to be found unenforceable in the eyes of the law in this various conditions:

(i) Lack of Capacity – both (or all) parties to a contract have NO ability to understand exactly what it is they are agreeing to. If it appears that one side did not have this reasoning capacity, the contract may be held unenforceable against that person.

(ii) Duress or coercion – will invalidate a contract when someone was defenseless into making the agreement.

(iii) Undue Influence – If Person B (employer) imposed Person A (employee) to enter into an agreement by taking advantage of a special or particularly persuasive relationship, the resulting contract might be found unenforceable on grounds of undue influence.

(iv) Nondisclosure – is essentially misrepresentation through silence – when one party neglects to disclose an important fact about the deal. Courts look at various issues to decide whether a party had a duty to disclose the information.

(v) Unconscionably – means that a term in the contract or something essential in or about the agreement was so shockingly unfair that the contract simply cannot be allowed to stand as is. The indication here again is to ensure fairness, so a court will consider (i) whether one side has grossly unequal bargaining power, (ii) whether one side had difficulty understanding the terms of the agreement or (iii) whether the terms themselves were unfair.

(vi) Mistake – a contract is unenforceable not because of bad faith by one party but due to a mistake on the part of one party (called a “unilateral mistake”) or both parties (called a “mutual mistake”). In either case, the mistake must have been about something important related to the contract, and it must have had a substantial effect on the exchange or bargaining process. And yet, the Director of Land and Survey reiterates, it is allowed under the Malaysian Contracts Act 1950

The Director of Sabah Lands and Surveys Department mentioned that he has no control over “Nominees Being Appointed” as it is not defined by the Sabah Land Ordinance and have no power to regulate such Trust Deeds and yet on the same breath he declares that all agreements including the Charge Agreements, Appointment of Nominees, Trust Deed Agreements, signing of any Agreement in escrow and others (even the signing of an undated white piece of paper) which had been ruled in the landmark Federal Court’s case of Datuk Ong Kee Hui v Sinyium Anak Mutit [1983], that the arrangement of submitting an undated resignation letter to the Speaker was contrary to public policy and are illegal, unlawful and of no effect therefore void. It is more puzzling that undated agreements with unnamed purchasers given to non-natives, listed companies or foreigners (which are illegal, unlawful and of no effect therefore void) are deemed valid by his explanations.

However, there was never any mentioned of TRANSFER to non-natives, listed companies or foreigners but rather the existence of legal documents that include S&P, MOT in escrow and signing of undated white piece of papers. The wordings and Clauses in the Sublease agreements and Trust Deeds goes further to prove the existence of dealings in NT lands by these non-natives, listed companies and foreigners. This blog merely reiterated that Non-natives, listed companies and foreigners had indirectly gained “ownership” of Sabah’s NT Lands through seemingly legal but downright dishonest means and mentioned IJM Plantations Bhd specifically.

The Sabah Lands and Surveys Department supports the notion that the sublease of RM 1 to non-natives is valid sublease fee as the rule on Freedom of Contact. (He would have made more sense if it he had based it on the principle of laissez faire – (an economic system which rejects any form of barrier and restriction to the economic process) BUT that principle is not binding and it must strictly comply with all regulations when it comes to protecting property rights. By the same token, I suppose, Sabah Lands and Surveys Department would consider SELLING of NT lands for RM 1 as adequate price based on the freedom of contract doctrine. After all Sabah Lands and Surveys Department had concurred that RM 1 for sublease as adequate FEE, fair consideration and valid. Surely by that notion, BUYING AND SELLING of NT lands for RM 1 between Natives is also an acceptable price going by the rule on freedom of contract. Are we sending the right message on the real value of NT lands?

This RM 1 sublease fee should never be permitted as it is bad business not only for these Non Natives, foreigners and listed Companies similarly it jeopardises the sub lessee (the person who holds the sublease) to many potential risks as the Registered Native Owner may cancel or surrender the subleasing agreement by repaying or paying off the sub lessee the mere RM 1 sublease fee payment and reclaim their NT lands. After all if you live by sword, you die by sword would seem to be the order of the day. The Director of Sabah Lands and Surveys Department had stated that 4,621 NT titles are subleased for 30 years and that another 1,339 NT titles are subleased for 99 years. He further disclosed that about 89,400 acres of NT lands are sub-leased to 4 listed companies among others. He should have revealed how extensively are these NT lands subleased to these 4 listed companies for RM 1 and who these NT lands owners are? My question is WHY would poor and underprivileged Natives buy these lands at market price or below in some case and then sublease it for a mere RM 1 to these wealthy Non Natives, foreigners and listed Companies?

The proposal was along the line of land reforms that an additional section to be added to the present Sabah Land Ordinance was blasted by the Director of Lands and Survey and was rejected outright as it had (in his words) element of self-interest. He did not elaborate if the element of self-interest contravenes any laws especially the Sabah Land Ordinance and/or the Malaysian Contracts Act. Why it is not legally and morally right for these Natives as the registered NT land owners to look out for their own interest is beyond logic.

Rahim Ismail the Pantai Manis Assemblymen, during the Sabah State Budget 2015 debate at the State Assembly, proposed that drastic action that includes revoking the land titles of locals who are profiteering from the rental of their lands to foreigners. Wasn’t this 4 term assemblymen recommending somehow a similar prescription. After all we just cannot have a government with land policies to just rob Peter to pay Paul or an economic warfare strategy of taking land from the poor in order to buy allegiance from the wealthy as they would do much to create growth in Sabah’s economy.

The laws once in place would allow the State to take away in a heartbeat these lands, houses, factories, plantations, mills, businesses or whatever that is “Non-native” owned as it was obtained illegally in the first place through such mechanism. This mechanism would provide some successes in exposing large-scale NT lands deals even before these lead to resource grabbing, pushing for policy measures that would lead to official investigation of questionable NT land deals and getting back lands that were grabbed by unscrupulous non-natives, listed companies and foreigners. Any responsible and accountable authority would agree that by drafting this new section into the Land Ordinance would effectively and eventually curb “dealings” and illegal ownership of these NT lands by non-natives, listed companies and foreigners. After all, I truly believe that NT lands restitution is a major step towards restoration of the Sabah Natives dignity.

Director of Land and Survey further mentioned that agreements prepared by lawyers, agents or brokers are deemed valid and are not an offence of any law if these NT land owners had consented and had signed on it. This would be tantamount to the Director of Land & Survey encouraging or even sanctioning such process even though it clearly contravenes the law of Contract Acts in s 24 – The consideration or object of an agreement is lawful, unless – (a) it is forbidden by a law; (b) it is of such a nature that, if permitted, it would defeat any law;(c) it involves or implies injury to the person or property of another; (d) the court regards it as immoral, or opposed to public policy. He had also stated that “If there is indeed illegal transfer of rights, be it through sub-lease, the court may order the Lands and Surveys to cancel it and return the land to the NT title holder and he further opined that these poor natives should go to the Courts for remedy and should refrain from further making “confusing” statement in newspapers.

One has to fully understand the role of the press and the internet as the ‘fourth domain’ of a concept that act as a check and balance on the three pillars of government: the executive, the legislature and the judiciary. The newspapers just like blog sites have responsibilities to its readers. However, just like the operation of a newspaper, the responsible blog sites are of public trust and its overriding responsibility is to the society it serves. Like the newspapers, blog sites also have many roles: a watchdog against evil and wrongdoing, an advocate for good works and noble deeds and an opinion leader for its community.

In conclusion, the director warned that action can be taken against those who abuse the due process of law and cautioned about frivolous and vexatious suits. Surely, the Courts are in a better position than the Director of Land and Survey to evaluate and pronounce on such suits. Sometimes, public bodies consider themselves to be above the law. Judicial review not only reminds them that they are not but provides the tools by which ordinary citizens can force them to adhere to the laws to which everyone else is subject.

To avoid acting illegally, an administrative body or public authority must correctly understand the law regulating its power to act, make decisions and give effect to it. Judicial review is the doctrine under which legislative and executive actions are subject to review by the judiciary. A court with judicial review power may invalidate government laws and decisions that are incompatible with a higher authority, such as the terms of a written statute. Judicial review is one of the checks and balances in the separation of powers, the power of the judiciary to supervise the legislative and executive branches. It is hard to escape the conclusion that, Director of Land and Survey is trying to put himself above the law. Because whatever the Director of Land and Survey claims, judicial reviews are not politically partisan. They are about no more and no less than acting within the law.

The Honourable Chief Justice of Sabah & Sarawak, Tan Sri Richard Malanjum in his keynote address at a symposium on Sabah Native Rights: Issues, Challenges and the Way Forward on the 30th of Jan 2012 had highlighted that the authority is guided by the principle that “the government is in a * fiduciary position to protect the interest of the natives.” Sabah Land and Survey Department as the custodian of NT lands should fully comprehend its role and duties and must upheld and not act ultra vires (beyond powers) on the right to property as guaranteed by the constitution under Article 13(1) of the supreme law of the nation. Failing which NT lands grab would now be deemed legal through such mechanism and the Sabah Natives would have lost FOREVER in their quest on NT land reforms protections.

* Fiduciary position – imposing a duty to act mainly for the benefit of the powers conferred within the scope of law. (e.g. the safeguarding and protection accorded to NT lands by the Sabah Land Ordinance).

Meanwhile, upon speaking to Musa Aman about this matter in detail, he said, “I want to emphasize something else to you. Democracy wins out in the long run because it offers a chance to fix its own mistakes. It is the only system built on the premise that if something is not working, people can actually correct it, from the bottom up as what you are doing. Democracy works best when people are given the opportunity to constantly monitor and repair the kinks in the machinery. Self-correction is not destabilizing. It is stabilizing.”