A bank cannot proceed with foreclosure if the borrower remedies the default before the order for sale is granted, and misrepresentation to the court can render the auction null and void.

Introduction

[1] The plaintiffs are the registered and beneficial owners of the property held under the title PM 2629, No Lot 32224, Tempat Batu 12, Jalan Balakong, Sg Besi, Pekan Kajang Daerah Hulu Langat, Selangor Darul Ehsan together with the two-storey terrace house at the address No 2, Jalan Resak, Taman Impian Ehsan, 43300 Balakong, Selangor Darul Ehsan ("the Property").

[2] The Property was charged to the first defendant bank ("RHB") as security for a housing loan granted to the plaintiffs by RHB.

[3] The plaintiffs' case is that RHB had wrongfully sold the Property by public auction and that the public auction of the Property was wrong at law and void. The plaintiffs filed this action against the RHB, the 2nd defendant ("D2") and the 3rd defendant ("D3"), seeking declaratory orders that public auction was wrong at law and is void. They also seek damages against RHB. D2 did not enter any appearance. Judgment in default was entered against him. The action against D3 was struck out pursuant to an order of this Court dated 5 August 2021.

[4] As for the plaintiffs' action against RHB, I gave judgment for the plaintiffs after full trial. I had also awarded exemplary damages in the sum of RM200,000.00 against RHB for their contumelious disregard of the plaintiffs' rights in continuing to foreclose on the plaintiffs' property even though the plaintiffs had settled the amount in arrears demanded in the Form 16D and for the misrepresentation by their lawyers to D3 during the 2nd Inquiry and 3rd Inquiry (both defined below), which resulted in the wrongful grant of the order of sale by D3 and wrongful auction of the plaintiffs' Property pursuant to the said order for sale.

[5] The full reasons for my decision are set out in this judgment.

Material Facts

[6] When the plaintiffs defaulted on their loan repayment, RHB served the plaintiffs a statutory notice of default in respect of the charge ("Form 16D'') dated 25 May 2016 under s 254 of the National Land Code ("NLC"). On 10 August 2016, RHB applied for an order for sale of the Property from D3 in a Form 16G under s 260(2) of the NLC. RHB stated on the Form 16G that the plaintiffs had failed to comply with the notice in the Form 16D.

[7] On 22 September 2016, the 1 st plaintiff ("P1") attended the first inquiry held by D3 at the Hulu Langat Land Office (the "1st Inquiry"). The plaintiffs pleaded in para 9 of their statement of claim that P1 had informed D3 and RHB's lawyer at the 1st Inquiry that the plaintiffs have changed their residential and delivery address to Block F-7-8, Kuarters Kerajaan DBKL, Batu 2 1/2, Warisan Cityview, Jalan 3/93A, 5600 Cheras, Kuala Lumpur.

[8] Inexplicably, in para 5 of its statement of defence, RHB denied para 9 of the statement of claim but went on to state that P1 had informed RHB's lawyer of the plaintiffs' change of address at the 1st Inquiry - which was exactly what the plaintiffs had pleaded! Para 5 of RHB's statement of defence is reproduced below:

5. Perenggan 9 Penyataan Tuntutan tersebut dirujuk dan Defendan Pertama menafikannya kerana Plaintiff Pertama hanya memberitahu perubahan alamat tersebut kepada peguamcara Defendan Pertama sewaktu Defendan Pertama hadir pada siasatan kali pertama iaitu pada 22 September 2016 di pejabat Hulu Langat."

[9] P1 had told D3 and RHB at the 1st Inquiry that he was in the process of selling the Property and that he had appointed a real estate agent to help find him a buyer. This is reflected in D3's notes at the 1st Inquiry (at bundle B/pg. 37), the image of which is reproduced below. D3 had ticked item 6(iii) "Penggadai dalam pr