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2021 MarsdenLR 1741
COURT OF APPEAL PUTRAJAYA
ZECON CAPITAL VENTURES SDN BHD – Appellant
Versus
AFFIN HWANG INVESTMENT BANK BERHAD – Respondent
[Civil Appeal No: Q-02(A)-1787-09-2019]
The discretion under s 148 of the Sarawak Land Code is broader than that under s 256 of the National Land Code, allowing the court to factor in justice and equity when considering applications for an order of sale.
Headnote:(A) Sarawak Land Code – Section 148 – National Land Code 1965 – Section 256 – Appeal against the decision of the High Court granting an order for sale of appellant's land – The learned Judicial Commissioner erred in applying the mandatory provisions of s 256 instead of the discretionary provisions of s 148 which allow for a consideration of justice in the circumstances – The appellant's claims of fraud, misrepresentation, and undue influence were erroneously dismissed as hearsay despite being supported by documentary evidence. (Paras 2, 12, 15-20, 25-35)
(B) Misrepresentation, undue influence and total failure of consideration established as grounds for the invalidity of the charge.
Facts of the case: The respondent secured loans totaling RM165 million for the Borrower for the construction of a hospital and subsequently sought to enforce a charge on the appellant's land for repayment of these loans, claiming default by the Borrower. (Paras 4-11)
Findings of Court: The learned JC misapplied the law regarding the order for sale under Sarawak Land Code, failing to recognize the broader discretion permitted under s 148 that permits the court to consider equity and justice based on the circumstances of each case. (Paras 21-24)
Issues: Whether the learned JC correctly applied s 148 of the Sarawak Land Code and adequately considered claims of undue influence and misrepresentation. (Paras 2, 28)
Ratio Decidendi: The court found that the charge was obtained through misrepresentation and undue influence, establishing the appellant's claims as legitimate and overriding the presumption of validity of the charge. The court emphasized that transactions should not exploit unequal bargaining power. (Paras 32-34)
Result: The appeal was allowed, and the High Court's order for sale was set aside with costs of RM10,000 awarded to the appellant.
JUDGMENT
Introduction
[1] This is an appeal by the appellant against the decision of the High Court, given at Kuching on 11 September 2019, granting the respondent's application for an order for sale of the appellant's land described as Lot No 14, Block 16, Salak Land District (the said land).
[2] The appellant raised two legal points. First, the learned Judicial Commissioner erred in his interpretation and application of s 148 of the Sarawak Land Code . His Lordship also misdirected himself by adopting and applying the provision "cause to the contrary" of s 256 of the National Land Code instead of the provision of "in the circumstances seems just" of s 148 and erred in holding that there was no merit in the arguments of the appellant and thereby granting an order for sale of the said land. The learned Judicial Commissioner ought to have appreciated that s 148 confers the Court with a wider discretion to consider the justice of the case than s 256 and accordingly ought to have applied the wide discretionary jurisdiction and found, with all the materials adduced by the appellant before the Court, that it is not "in the circumstances seems just" to grant an order for sale.
[3] Second, the learned Judicial Commissioner erred in holding that the appellant's claims of fraud, misrepresentation, undue influence and total failure of consideration for the charge are premised solely on hearsay evidence when the said claims are substantiated by contemporary documentary evidence, namely, letter dated 15 December 2016, letter dated 20 December 2016 and the valuation report.
Background Facts
[4] By a Letter of Award dated 26 April 2013, Jabatan Kerja Raya Malaysia (JKR) awarded to Zecon Berhad (Borrower) the contract for the construction and completion of Hospital Petra Jaya, Kuching, Sarawak (the project) for the contract sum of RM495 million.
[5] By a Letter of Offer dated 27 September 2013, Supplemental Letters of Offer dated 9 December 2013 and 10 December 2013 and the Facilities Agreement dated 27 December 2013, the respondent and two other banks (Bank Pembangunan Malaysia Berhad and Affin Bank Berhad) granted the Bank Guarantee (BG), Revolving Credit (RC) and Letter of Credit (LC/ TR) facilities in the total sum of RM165 million (the Existing Syndicated Facilities) to the Borrower for the purpose of part financing the construction and completion of the said project.
[6] It was agreed between the respondent and the two aforesaid banks (the Syndicated Lenders) and the Borrower that the Existing Syndicated Facilities would be secured by:
(i) a Charge over the Borrower's BG Sinking Fund Account at the respondent;
(ii) an Assignment of Contract Proceeds of the said project by the Borrower;
(iii) an Accounts Charge by the Borrower over its bank accounts at the respondent;
(iv) an Assignment of Insurance by the Borrower;
(v) Deeds of Subordination by Dawla Capital Sdn Bhd and Econ Engineering Sdn Bhd;
(vi) a Personal Guarantee by one Datuk Hj Zainal Abidin bin Hj Ahmad to the respondent;
(vii) a Corporate Guarantee by one Dawla Capital Sdn Bhd to the respondent; and
(viii) an Assignment of Guarantee by one Zecon Engineering Sdn Bhd.
[7] From para 4 above, it can be seen that the appellant was not a security party for the Existing Syndicated Facilities and the appellant's said land was not a security for the Existing Syndicated Facilities.
[8] After the execution and perfection of the aforesaid facilities and securities documents, from 2013 until 2016, the respondent issued the BG in respect of the said project, release the RC Facility to the Borrower and allowed partial drawdown of the LC/TR Facility.
[9] On 9 January 2017, the appellant charged the said land to the respondent. The execution and purpose of this charge was a contentious issue before the High Court. The appellant contended the charge was intended as a security for additional facility of RM30 million the Borrower had applied from the respondent and which the respondent d
