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2021 MarsdenLR 118
HIGH COURT MALAYA SHAH ALAM
OCBC BANK (MALAYSIA) BHD – Appellant
Versus
PROLINK MARKETING SDN BHD – Respondent
[Originating Summons No: BA-24FC-565-10/2020]
A registered charge under the National Land Code obligates the court to grant an order for sale upon default unless cause to the contrary is established by the chargor.
Headnote:(A) National Land Code – Section 256 – Order for Sale – The Bank applied for an order of sale for the registered land due to the Defendant's failure to repay RM14,370,789.49 owing under facilities – The Defendant's application for a stay pending appeal in a related suit was dismissed for lack of merit. (Paras 3, 5, 19, 36)
(B) Chargee Rights – The court reiterated that a registered charge is a statutory instrument, and the chargee is entitled to enforce statutory rights upon default – The application for an order for sale does not constitute a substantive judgment on the debt owed. (Paras 15, 30, 34)
Facts of the case: The Plaintiff, a Bank, sought an order for sale of the Defendant's land due to non-payment of substantial sums under several loan facilities, having issued a statutory notice for breach. The Defendant, having been ordered to be wound up, failed to remedy the breach despite notifications. (Paras 3-12)
Findings of Court: The court determined that the Bank met all conditions for an order for sale under Section 256 of the NLC and that the Defendant did not prove any cause to the contrary. (Paras 29-34)
Issues: Whether the Defendant could establish any cause to the contrary against the Bank's application for an order for sale and whether the stay of hearings was warranted based on a related appeal. (Paras 30-32)
Ratio Decidendi: The court clarified that the Defendant's claims from another case did not negate the chargee’s rights and reiterated that the statutory obligations under Section 256 must be complied with unless a contradiction is established. (Paras 33-34)
Result: Application for sale granted.
JUDGMENT
A. Introduction
[1] The Plaintiff (the "Bank") is the legal chargee of the land held under HS(D) No 283572, PT No 35468, Mukim Damansara, Selangor Darul Ehsan ("the Land").
[2] The Defendant is the registered owner of the Land.
[3] Through the originating summons in Enc 1, the Bank has applied under s 256 of the National Land Code (" NLC ") for an order of sale of the Land though a public auction to satisfy the total sum of RM14,370,789.49 due and owing by the Defendant to the Bank as at 31 July 2020 under the Facilities (as defined below).
[4] The Defendant has applied by way of a notice of application in Enc 7 for a stay of the hearing of the Bank's application in Enc 1 pending the Bank's appeal against the Court's decision in a separate suit ie Suit No BA- 22NCvC-46-01/2019.
[5] At the conclusion of the hearings of the applications in Enc 1 and Enc 7, this Court found that the Defendant had failed to establish any "cause to the contrary" or any special circumstances to merit the stay of the hearing of Enc 1. Accordingly, the Court granted the Bank the order of sale of the Land and dismissed the Defendant's application for stay of hearing. The full grounds of my decision is set out in this Judgment.
B. The Facts
[6] By a legal charge dated 7 September 2015 ("the Charge"), the Defendant created a charge in favour of the Bank over the Land as security for the sums owing under, inter alia, Term Loan 1 Facility and Trade Line 1 Facility ("the Facilities") granted by the Plaintiff to the Defendant subject to the terms and conditions therein.
[7] The Charge was registered at the Selangor Register of Charges on 1 October 2015 (Presentation No 102685/2015). Under the Charge, the Defendant is, inter alia, required to repay upon demand, the balance sum due and payable and all other costs and expenses incurred by the Plaintiff pursuant to the terms of the Charge.
[8] By way of letters dated 12 June 2019, the Bank, through its solicitors, demanded from the Defendant payment of the sums due under the Facilities.
[9] The Defendant failed to make and effect full payment of the outstanding sums due and owing under the Facilities demanded by the Bank, in breach of the terms of the Charge ("the Breach").
[10] The Breach had continued for a period of 1 month. Thereafter, the Plaintiff, through its solicitors, had caused a statutory notice in Form 16D to be issued on 21 August 2020 in respect of the Charge ("the Notice") requiring the Defendant to remedy the Breach within a further period of 1 month from the date of service thereof, failing which, the Bank will apply for an order for sale. The Notice was served on the Defendant on 21 August 2020.
[11] The Defendant has failed, refused and/or neglected to remedy the Breach. The Bank had on 9 October 2020, filed the originating summons in Enc 1 seeking for an order for sale.
[12] The total amount due under the Charge as at 31 July 2020 is RM14,370,789.49, where RM1,225.741.15 is the amount outstanding under the Term Loan 1 Facility and RM13,145, 048.34 is the amount outstanding under the Trade Line 1 Facility.
[13] The Defendant had been ordered to be wound up on 5 January 2021 pursuant to a conditional Winding Up Order dated 5 August 2020 made through a third party winding up petition filed by one of the Defendant's creditors. The Winding Up Order has become unconditional as the Defendant had failed to meet the condition of the Order. The Official Receiver has been appointed as the liquidator of the Defendant.
C. The Law
[14] Section 256 of the NLC states:
"256. Application to Court for Order for Sale
(1) This section applies to land held under:
(a) Registry title;
(b) the form of qualified title corresponding to Registry title; or
(c) subsidiary title,
and to the whole of any undivided share in, or any lease of, any such land.
(2) Any application for an order for sale under this Chapter by a chargee of any such land or lease shall be made to the Court in accordance with the provisions in th
