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2024 MarsdenLR 469
HIGH COURT MALAYA PULAU PINANG
RHB BANK BERHAD – Appellant
Versus
SIOW KOK YONG & ANOR – Respondent
[Originating Summon No: PA-24FC-314-06/2024]
The court established that an order for sale under sections 256 and 257 of the National Land Code is mandatory unless the defendant proves cause to the contrary, which was not established in this case.
Headnote:(A) National Land Code 1965 - Sections 256, 257, and 254 - Originating Summons for the sale of property due to loan default - Plaintiff granted an Order for sale after establishing compliance with statutory provisions - Defendants failed to prove non-service of notice as cause to the contrary - Statutory powers of the Court must be adhered to. (Paras 1, 14, 36)
(B) Cause to the contrary - Definition and categories established in Low Lee Lian v. Ban Hin Lee Bank Bhd - Defendants' arguments regarding non-service of Form 16D deemed insufficient as proper service was established. (Paras 17, 19, 34)
Facts of the case:
The Plaintiff sought an Order for the sale of property following loan defaults by the Defendants, who were guarantors for the Borrower company. Legal notices were issued, and the Plaintiff complied with all statutory requirements. (Paras 4, 10)
Findings of Court:
The Court found that the Defendants did not establish cause to the contrary, thus granting the Plaintiff's application for sale and setting a tentative auction date. (Paras 36)
Issues: The main issues included whether the Defendants received Form 16D and whether this constituted cause to the contrary under the National Land Code. (Paras 12, 19)
Ratio Decidendi: The Court ruled that the Plaintiff complied with statutory requirements and that the Defendants failed to demonstrate any cause to the contrary regarding the Order for sale. (Paras 34, 36)
Result: Order for sale granted as prayed by the Plaintiff.
JUDGMENT
Introduction
[1] The Plaintiff commenced this Originating Summons seeking an Order for the sale of a property held under Geran No. 424272, Lot No. 2877, Bandar Gelugor, Daerah Timor Laut, Negeri Pulau Pinang together with the premises erected thereon (hereinafter referred to as the "said land") pursuant to ss 256 and 257 of the National Land Code 1965 as well as O 83 of the Rules of 2012.
[2] Having heard learned Counsel for both parties submit with the aid of their written submissions, I had allowed the Plaintiff's application with costs. Dissatisfied with the said decision, the Defendants have since filed a notice of appeal. I will hereinbelow set out the salient background facts, the parties' respective contentions, the applicable law and my reasons for having allowed the Plaintiff's application herein.
Background Facts
[3] The background facts can be gleaned from the affidavits and can be summarised as follows.
[4] The Defendants are the registered owners of the said land and they are also the Directors for KH-Base Engineering Sdn Bhd (Borrower company) which had applied for and received loan facilities from the Plaintiff in the total sum of RM8,000,000.00 from 1997 until 2015 and an additional Term Loan of RM1 million in 2020.
[5] It is also undisputed that the Defendants had guaranteed the loan of the Borrower company and have executed four personal guarantees dated 21st April 1997, 14th February 2001, 27th October 2005 and 12th June 2020, respectively.
[6] As securities for the loan facilities, the Defendants had deposited a sum of RM1,321,265.00 (as at 30th July 2015) with the Plaintiff and had charged 3 properties to the Plaintiff. Two properties have since been fully redeemed save for the said land.
[7] As consideration for the loan facilities, the Defendants had also executed seven third-party charges on the said land.
[8] The borrower company had defaulted on paying the loan facilities pursuant to the agreement between the parties and consequently legal notices were issued on 18th October 2023 and 8th November 2023 respectively.
[9] Subsequently, on 15th January 2024, the Plaintiff issued Form 16D to the Defendants and the same was copied to the borrower company in accordance with s 254 of the National Land Code 1965 for the Defendants to remedy the breach within 30 days from the date of the issuance of Form 16D.
[10] The Defendants having defaulted in making repayment of the principal sum and interest, the Plaintiff herein took out an application vide this Originating Summons to enforce the statutory charge by way of an Order for sale.
[11] The Defendants have resisted the said application on grounds which will be discussed later in this judgment.
The Parties' Respective Contentions/Submissions
The Plaintiff's Contentions/Submissions
[12] The Plaintiff contends/submits as follows:
a. that the Plaintiff has complied with the provisions under ss 256 and 257 of the National Land Code 1965 ;
b. that there are still outstanding sums owed by the Defendants;
c. that the Defendants have failed to prove cause to the contrary;
d. that the Defendants have failed to establish that granting an Order for sale by the Court would be contrary to some rules of law or equity; and
e. that pursuant to ss 9.20 and 9.30 of the Charge Annexure, parties have agreed that service of any notices and legal process shall be by way of pre-paid registered post and as such Form 16D was deemed served on the Defendants.
The Defendants' Contention/Submission
[13] From the Defendants' brief submissions, the crux of the Defendants' contention is that there was non-service of Form 16D pursuant to s 254 of the National Land Code 1965 which they contend amounts to cause to the contrary.
Analysis
[14] It is trite that pursuant to ss 256 and 257 of the National Land Code 1965 , the Plaintiff is entitled to dispose of the said lands by way of public auction and not otherwise.
[15] In this respect, reference is made to the case of Mashudan Kamar & Ors v
