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2021 MarsdenLR 4064
HIGH COURT MALAYA PULAU PINANG
PUBLIC BANK BERHAD – Appellant
Versus
BAGAN MASYHUR SDN BHD – Respondent
[Summons No: PA-24FC-169-03/2020]
The court clarified that failure to demonstrate valid cause prevents a chargor from avoiding a foreclosure order under the National Land Code.
Headnote:(A) National Land Code 1965 – Section 256 – Application for foreclosure of charged property – Plaintiff's application to sell the charged property via public auction was granted – No cause shown by the Defendant to refuse the order – The court outlined conditions when an order for sale may be refused, referencing the Supreme Court's interpretation in Low Lee Hian v. Ban Hin Lee Bank Bhd, [1997] 1 MLJ 77 (Paras 17-18).
(B) Global Settlement Agreement functions – Obligations for installment payments remain despite property redemption – The agreement stipulates penalties for default and conditions for settlement which were not satisfied by the Defendant (Paras 9-10, 22-26, 38-42).
Facts of the case: The Defendant defaulted on financial facilities and sought to contest the Plaintiff's application for property foreclosure citing various defenses, all ruled as invalid by the court.
Findings of Court: The Defendant's claims regarding waiver of installment payments and computation of outstanding amounts were rejected as they failed to demonstrate merit or provide evidential support.
Issues: Whether the Defendant could show cause to prevent the sale of the property.
Ratio Decidendi: The Plaintiff’s rights under the agreement were cumulative and could not be waived without express written consent; the court clarified the requirements for an order of sale under the NLC.
Result: Application for sale of the property granted.
JUDGMENT
Introduction
[1] This is the Plaintiff's application, as chargee, to foreclose the charged property. After hearing submission, I was satisfied that there was no cause to refuse the order prayed for to sell the charged property by way of public auction pursuant to s 256 of the National Land Code 1965 (" NLC "). These are the grounds for my decision.
Background
[2] The Defendant was part of the group of companies comprising:
(a) The Defendant;
(b) GMP MasyurSdn Bhd;
(c) Masyur First Development Sdn Bhd;
(d) Zuihaimi Bin Ismail
(Collectively referred to as the "Masyur Group")
Hock Thai Finance Corporation Berhad - Public Bank Berhad
[3] Each of the companies in the Masyur Group had taken out financial facility or facilities with, and had respectively charged property or properties to, Hock Thai Finance Corporation Berhad ("Hock Thai") - which rights were vested in the Plaintiff Bank since 12 March 2001. (For ease of reference, references to the Plaintiff shall also refer Hock Thai at the material time.)
Subject Property And Corresponding Accounts
[4] On the part of the Defendant, they had inter alia taken 2 Fixed Loans, both secured by the subject property - Geran No Hakmilik 24015 No Lot 200, Seksyen 2, Bandar Butterworth, Daerah Seberang Perai Utara, Negeri Pulau Pinang ("Property"):
(For the purposes of our consideration, our focus is on these 2 Fixed Loans secured by the Property)
Global Settlement Agreement (2010)
[5] In time, the Masyur Group, including the Defendant, defaulted in servicing the respective facilities. On 23 September 2010, the Masyur Group entered into a global settlement agreement ("GSA") with the Plaintiff, which included the 2 Fixed Loans. The cut-off date for the purposes of the GSA is 31 July 2010.
Outstanding Debt And Settlement Sum
[6] As at 31 July 2010, the Masyur Group's global outstanding debt stood at RM28,385,665.71. Under the GSA, the Defendant would only have to pay RM12,000,000.00 with interest accruing under the terms of the GSA.
[7] More particularly for the 2 Fixed Loans, the apportioned outstanding debt stood at follows:
[8] Under the GSA, the revised redemption sum for the Property (or the revised aggregate outstanding debt for the 2 Fixed Loans) stood at RM1,100,000.00. It was, by any measure, a very substantial haircut for the Plaintiff and a very good deal for the Defendant.
Salient Terms and Conditions
[9] The GSA was, of course, subject of course to terms and conditions. The salient terms for the purposes of our consideration are summarized as follows:
(a) The Masyur Group shall pay the settlement sum by way of instalments set forth in para 1(c) of Schedule B (Terms of Settlement) of the GSA.
(b) The Plaintiff may allow the Masyur Group to discharge the various charged properties subject to them receiving the redemption sum [paragraph 3(b)(ii) of Schedule B (Terms of Settlement) of the GSA].
(c) The receipt of the redemption sum does not affect the Masyur Group's obligation to continue paying the instalments [paragraph 3(b)(iii) of Schedule B (Terms of Settlement) of the GSA].
(d) The settlement sum is strictly subject to the Masyur Group's strict and punctual compliance with the GSA terms [paragraph 1(a) of Schedule B (Terms of Settlement) of the GSA].
(e) In the event of default of the GSA by the Masyur Group / Defendant, the indebtedness shall revert to what was due and to be computed under the existing facilities, ie, original facilities [clause 2.2, 5, 7 of the GSA].
(f) The Plaintiffs rights are cumulative and can only be waived or varied by an express written waiver or variation [clause 10 of the GSA],
Payments Under GSA
[10] The total sum paid under the GSA was RM9,359,000.00 comprising RM7,725,000.00 as redemption sum for 6 charged properties and RM1,634,000.00 as instalment payments
Event Of Default Of GSA (2019)
[11] The last instalment payment was made on 30 November 2016. Despite various indulgences accorded to the Masyur Group, they defaulted on the instalment payments from
