CIVIL PROCEDURE BENCH BOOK 2009 MATTER RELATING TO LAND

ORDER FOR SALE

1. Provisions S. 254-265 NLC.

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A chargee may pursue any or all remedies to recover monies lent by him. He may enforce his statutory charge against the chargor by way of proceedings in rem under s. 256 of the NLC. He may sue the principal debtor (who may or may not be the chargor) upon the personal covenant contained in any loan agreement that was entered into between the parties. He may proceed against the surety who has guaranteed the loan. And he may pursue all these courses simultaneously, contemporaneously or successively. [Low Lee Lian v Ban Hin Lee Bank Bhd [1997] 1 MLJ 77 FC] In an application for an order for sale under s. 256 of the NLC, the court must make the order for sale unless it is satisfied of the existence of the cause to the contrary. [United Malayan Banking Corp Bhd v Choong Bun Sun and another application [1994] 2 MLJ 2210]
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A chargee who makes an application for an order of sale in foreclosure proceedings under s.256 of the NLC does not commence an action. He merely enforce his rights as a chargee by exercising his statutory remedy against a chargor in default. [Kandiah Peter v Public Bank Berhad [1994] 1 MLJ 119]

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In a statutory charge under the National Land Code (NLC), the rights and powers of the chargee flow from the relevant provisions of the NLC, to wit ss 254 265 of the NLC.

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CIVIL PROCEDURE BENCH BOOK 2009 MATTER RELATING TO LAND

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In Low Lee Lian v Ban Hin Lee Bank Bhd, supra, it was held that cause to the contrary within s. 256(3) of the NLC might be established only in three categories of cases i.e.:

(b)

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The Supreme Court in Kimlin case set out certain rights of the chargor in proceedings to enforce a statutory charge, which include: (a) The right to be served with the notice in Form 16D, or in a case of charges where

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In the case of land held under Land Office title or subsidiary title, the application for order for sale has to be made to the Land Administrator in accordance with the procedure laid down in s. 260 of the NLC. Any objection as to the validity of the charge must be taken before the court for it is no defence in the enquiry before the Land Administrator. [Kimlin Housing Developmnet Sdn Bhd v Bank Bumiputra Sdn Bhd [1997] 2 MLJ 805]

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(c)

When it can be demonstrated that the grant of the order of sale would be contrary to some rule of law or equity to which the sale relates.

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When a chargor can demonstrate that the charge has failed to meet the condition precedent for making an application for an order of sale. For example failure to prove the making of a demand, or service upon chargor of notice in Form D.

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(a)

When a chargor is able to demonstrate that the charge is defeasible upon one or more of the grounds specified in s. 340(2) and (4)(b) of the NLC;

CIVIL PROCEDURE BENCH BOOK 2009 MATTER RELATING TO LAND

the principle is payable on demand, a notice in Form 16E. (b) Non-compliance with the notice requirement will render a subsequent order for sale liable to be set aside as being void and of no effect. [Muniandy a/l Thamba Kaundan & Anor v Development & Commercial Bank Bhd & Anor [1996] 1 MLJ 374] The opportunity of showing cause to the contrary. The right to be served with a copy of the order for sale, and for the sale to be advertised. The right, at any time before the sale has been concluded, to stop the sale by tendering the total sum due under the charge. The right to be heard where the purchaser of a judicial sale apply for an extension of time to pay the balance of the purchase price. Denial of such right will render any registration of sale procured thereby null and void. [M & J Frozen Food Sdn Bhd v Siland Sdn Bhd & Anor [1994] 1 MLJ 294 SC]. The right to an order to setting aside a judicial sale if he can establish that the sale has been conducted fraudulently, collusively or improperly to the prejudice of the chargor. [Kuala Lumpur Finance Berhad v Yap Poh Kian (Teo Sik & Anor, Interveners) [1991] 1 MLJ 472]

(c) (d)

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(f)

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(e)

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CIVIL PROCEDURE BENCH BOOK 2009 MATTER RELATING TO LAND

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Service of notice: s. 430 433 of the NLC: (a) In Kekatong Sdn Bhd v Bank Bumiputra (M) Bhd [1998] 2 MLJ 440 the statutory demand by way of Form D was not served upon the appellant in the manner prescribed by the NLC. It was held that such failure vitiated the order for sale.

(b)

O 83 r 3(3) Of The RHC 10.

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O 83 r 3 (3) only applies to a charge action begin by originating summons in which the plaintiff is the chargee and claims delivery of vacant possession or payment of money secured by the charge or both (read with O. 83 r. 3 (6). Where O 83 r 3(3) applies, the affidavit in support must show the statement of the account between the chargor and the chargee with particulars of the account as set out therein. More than one such affidavits may be filed if the matter cannot be disposed of on the first return date. At least one further affidavit is always required to state the total amount due on the date of the order. [Citibank NA v Ibrahim b Othman [1994] 1 MLJ 608]

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In foreclosure proceedings of charged property, the chargee must comply with the procedural rules set out in O. 83 of the RHC.

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In Oversea Union Bank (M) Bhd v L & L Properties Sdn Bhd [1999] 2 MLJ 637, it was held that the question as to whether Form D has been issued prematurely must be determined by looking at the period for repayment stated in the notice of demand and not in the Form 16D notice.

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