The court affirmed that a lender's rejection of repayment proposals does not constitute a valid defense against foreclosure if the lender acts within its contractual rights and the borrower fails to demonstrate a valid 'cause to the contrary'.

Yusrin Faidz Yusoff JC:

Introduction

[1] This judgment concerns a foreclosure action brought by Maybank Islamic Berhad ("plaintiff") against Hoo Soot Khing ("defendant") over the default in repaying two financing facilities secured by charges over the defendant's property. The plaintiff seeks an order for sale of the property under Section 256 of the National Land Code 1965 . The Court has carefully considered the submissions and evidence presented by both parties and now delivers its judgment.

Background Facts

[2] The defendant together with David Chua Kok Tee and Chua Hung Tatt ('the Borrowers') obtained two financing facilities from the plaintiff bank. The first facility was a housing loan of RM285,000.00, including legal fees of RM25,000.00 and a valuation fee of RM10,000.00, for the purpose of refinancing a double storey Bungalow located at Mukim Kuala Lumpur, Daerah Kuala Lumpur, Negeri Wilayah Persekutuan KL, which is held under Hakmilik Sementara H.S. (D) 31844, PT 621 bearing postal address of No 33, Lorong Bruas, Damansara Heights, 50490 Kuala Lumpur ("the Property"). The second facility was a term loan of RM1,000,000.00.

[3] The Borrowers entered into two separate Commodity Murabahah Facility Agreements dated 9 March 2016 and 10 March 2016, respectively, in respect of the financing facilities extended to them. Linder these agreements, the selling prices payable by the Borrowers were RM1,669,952.58 and RM973,203.20, respectively (collectively referred to as the "Facility Agreements"). As security for repayment, the defendant executed two charges over the Property, which were duly registered on 17 March 2016 under Presentation Nos 7363/2016 and 7364/2016.

[4] However, the Borrowers defaulted in making repayments. As of 31 May 2024, the Borrowers owed RM853,401.20 for the housing loan facility and RM1,254,133.29 for the term loan. Despite the plaintiff sending a demand letter dated 11 June 2024 and a statutory notice dated 6 August 2024 under the National Land Code 1965 , the Borrowers failed to settle the outstanding amounts. Consequently, the plaintiff initiated this foreclosure action by filing the Originating Summons on 12 September 2024.

[5] On 20 March 2025, upon a thorough examination of the cause papers, I was satisfied that they were in proper order and that the defendant had failed to show cause to the contrary. Accordingly, I granted the order as prayed, with costs awarded in the sum of RM6,000.00. Dissatisfied with my decision, the defendant filed a notice of appeal on 18 April 2025.

Issues

[6] The following issues arise for determination:

(i) Whether the plaintiff's rejection of the defendant's repayment proposals was unreasonable and whether such conduct constitutes a valid defence against the foreclosure action;

(ii) Whether the foreclosure action is premature; and

(iii) Whether the plaintiff has fully substantiated the quantum of its claim.

Counsels' Contentions

(a) Defendant's Contentions

[7] The defendant did not deny the existence of the agreements leading to the grant of the facilities to the Borrowers were executed. Nevertheless, the learned counsel for the defendant, Chan Jia Ying argues that the plaintiffs conduct has been unreasonable and constitutes "cause to the contrary". Reliance is made on the case of Kheng Soon Finance Bhd v. MK Retnam Holdings Sdn Bhd & Ors [1983] 1 MLRA 467; [1983] 2 MLJ 384 (FC) per Salleh Abas CJ.

[8] Counsel contends that the plaintiff deliberately withheld the fact that the Borrowers had made repeated efforts to engage with the plaintiff to settle the outstanding sum. it is further asserted that the plaintiff persistently rejected the proposed payments without offering any reasonable explanation or justification, despite being aware of the Borrowers' financial difficulties, which were due to the Government of Malaysia's delay in paying the overdue sum for construction works carried out by DC & A Developments Sdn Bhd, a family company in which the Borrowers are directors.

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