Establishing a compensation scheme under the Malaysian torrens system

Abstract

This thesis is grounded on the proposition that no men shall be deprived of their land without adequate compensation. Land, being the most valuable asset is the catalyst for economic and social development. As such, the security of land tenure and dealing is one of the utmost important aspects of any government administration. Any possible risk of wrongful deprivation of one’s land must be prevented, and if such risks are unavoidable, it must be properly covered under a statutory compensation scheme guaranteed by the state. Deprivation of property without any proper compensation is against the constitutional guarantee provided under the Article 13 of the Federal Constitution. The Malaysian Torrens system adopts only two main principles of the Torrens system i.e the mirror and curtain principle which guarantee the legal security to the registered title and interest holders. Nevertheless, the system is yet to incorporate the insurance principle which provides statutory compensation to the deprived party due to the malfunction of the land registration system. The absence of economic security under the system requires serious consideration in view of possible new risks of land fraud with the introduction of the computerised land registration system. This research examined the need to establish a statutory compensation scheme in Peninsular Malaysia by using qualitative research methods of content analysis, comparative study and field work interviews with various stakeholders. The research resolved that the threat to the security of land tenure and dealings are becoming more complicated and sophisticated in this digital era thus requires immediate attention. To cater to the risks, the research proposes a statutory compensation scheme to be established by the government, as a form of viable consumer protection to the registered title and interest holders. This recommendation is in line with the fundamental right to the property enshrined in Article 13 of the Federal Constitution as well as the maqaṣid al-shari'ah which strongly emphasises the protection of property as one of the essentials (ḍaruriyyat) in Islam. The research concludes that a secure land tenure system is important to enhance public confidence in the land registration system and it will contribute to the economic development of the country.