Mohamed Dzaiddin bin Hj. Abdullah SCJ:

This was as appeal from the decision of Anuar J. given on 26 March 1992 setting aside the order for sale dated 15 February 1988 made under s. 257 National Land Code 1965 and the subsequent public auction fixed on 12 September 1990 in respect of the respondent's property, on which is situated a single storey terrace house, held under H.S.(D) 22274, P.T. 615, Mukim Kuala Lumpur, Daerah Kuala Lumpur (the said property).

Background

On 4 April 1984, the appellant granted an overdraft facility of RM50,000 (the first facility) with interest at 9% per annum to Sira Communications & General Contractor (the borrower), a sole proprietorship firm carrying on business at No. 272-1, Jalan Brickfields, Brickfields, Kuala Lumpur, to be secured by a first legal charge on the said property. In its letter of offer to the borrower, it was made known that the purpose of the loan was for use as a working capital and the loan was subject to a yearly review. On 10 April 1984, the respondent executed a first legal charge in Form 16A NLC together with an annexure containing the terms and conditions of the charge which was presented and registered at the Land Registry, Wilayah Persekutuan, on 17 May 1984.

It seemed that sometime in October 1984, the borrower applied for and was granted by the appellant an additional facility of RM10,000 (the second facility), making a total loan of RM60,000 to be secured by a second legal charge on the said property. Except for the amount of the additional loan, a similar letter of offer containing similar terms and conditions as the first facility was sent to the borrower on 16 October 1984. On 13 November 1984, the respondent executed another Form 16A and an annexture which was duly presented and registered at the Wilayah Land Registry on the following day. Next, by a letter dated 7 March 1986, the appellant informed the borrower that the Management had approved the renewal of its overdraft facility for RM60,000, which would carry an interest rate of 10% per annum. The said facility was to be secured by first legal charge on the said property and also subjected to yearly review and yearly reduction of RM10,000 from 1 March 1987.

From the record, it would appear to us that by October 1986, the borrower had not been operating its account with the appellant satisfactorily. As the account remained overdrawn, the appellant must have decided to recall the facility and to foreclose the said property. Hence, on 18 February 1987, the appellant's solicitors sent to the respondent a letter under AR registered cover, enclosing a Notice of Default in Form 16D informing him that he had committed a breach of the provision of the charge by not paying on demand the sum of RM61,565.75 being the outstanding overdraft as at 20 October 1986 together with interest at 10% per annum on monthly rest. The respondent was then required to remedy the breach within 14 days from the date of the service of the aforesaid notice.

On 24 March 1987, the appellant's solicitors proceeded to file an originating summons under s. 256 NLC applying for an Order for Sale of the said property. Consequently, on 15 February 1988, the High Court heard the originating summons and made orders in terms of the originating summons. This was followed by summons for direction and the fixing of an auction sale on 12 September 1990.

Respondent's summons in chambers

On 11 December 1990, the respondent filed an application by summons in chambers, which was later amended, seeking for an order that the order for sale dated 15 February 1988, the directions dated 12 August 1988 and the sale by public auction fixed on 12 September 1990 be set aside. The hearing of the application commenced on 2 October 1991. However, at the continued hearing on 26 March 1992, Counsel for the respondent raised a preliminary issue on the letter dated 7 March 1986 granting the renewal of facility of RM60,000 to the customer. The relevant text of th