The court affirmed the right to include legal fees in claims under the National Land Code, emphasizing procedural compliance over technical objections.

RK Nathan J:

Facts

The defendant is the registered proprietor of lands held under:

(i) Title No. 5871, Lot No. 118 Seksyen 20, in the Town and District of Kuala Lumpur in the State of Wilayah Persekutuan, Kuala Lumpur, together with one (1) unit of five (5) storey shop-house erected thereon bearing address No. 16, 16A-D, Jalan Petaling, 50000 Kuala Lumpur; and (ii) Titles No. 17721 Lot No. 533 Seksyen 56 and H.S.(D) 27700 Lot No. P.T. 7 Seksyen 56, both in the Town and District of Kuala Lumpur, in the State of Wilayah Persekutuan, Kuala Lumpur, together with one (1) unit four (4) storey shop-house erected thereon bearing address No. 29, Jalan Merbau, Off Jalan Kenanga, 55200 Kuala Lumpur; (the said properties).

The defendant had requested and the plaintiff had approved banking facilities to the defendant totalling RM3,700,000 to be secured over the said properties. The defendant created a first legal charge over the said properties in favour of the plaintiff to secure repayment of three facilities, namely:

(i) a term loan for RM400,000,

(ii) overdraft for RM1,800,000.00, and

(iii)trust receipts for RM1,500,000,

making the total of RM3,700,000. The defendant agreed to repay the said sum together with interest, legal costs and other expenses accruing up to the date of full payment, upon the terms and conditions contained in the said charge. The defendant defaulted in payment to the plaintiff. The plaintiff then demanded payment by way of a demand notice dated 12 January 1999 the sum of RM3,925,216.90 made up as follows:

Facility Total Outstanding

(i) Term loan RM321,960.52 (inclusive of interest up to 30 December 1998)

(ii) Overdraft RM2,065,703.38 (inclusive of interest up to 28 December 1998)

(iii) Trust receipts RM1,534,808 (inclusive of interest up to 31 December 1998)

(iv) Legal fees RM2,745

When there was no response the plaintiff delivered by hand the statutory notice in Form 16D of the National Land Code 1965 ( NLC ) dated 8 February 1999 to the defendant for the same amount as was contained in the earlier notice of demand. Although acknowledging receipt of the said statutory notice of demand, the defendant failed to comply with same.

The plaintiff therefore now moves this court for an order for sale with consequential prayers claiming an indebtedness by the defendant as at 30 April 1999 a sum of RM4,055,691 with accrued interest. Relying on the conclusive evidence clause as contained in the charge the plaintiff prays for an order in terms of this originating summons.

Findings Of The Court

Can The Plaintiff Include Legal Fees?

Referring to the plaintiff's claim for RM3,925,216.90 as contained in its notice of demand dated 12 January 1999 and in the statutory notice of demand dated 8 February 1999 the defendant argued that including a claim for legal fees amounting to RM2,745 was fatal when attempting to obtain an order for sale pursuant to s. 256(3) of the NLC . The defendant relied on O. 59 r. 3(1) of the Rules of the High Court 1980 (the RHC). The said rule reads as follows:

3.(1) Subject to the following provisions of this Order, no party shall be entitled to recover any costs of or incidental to any proceedings from any other party to the proceedings except under an order of the Court.

The defendant based this submission relying on the decision in Malaysian International Merchant Bankers Bhd. V. Chi Liung Holdings Sdn. Bhd. [1992] 3 CLJ 35 . The defendant in that case raised the same objection to the inclusion of the legal costs in the Form 16D statutory notice. Lim Beng Choon J said at p. 854:

Since s. 268(1) clearly stipulates the items to which the purchase price can be utilised, the purchase price cannot be utilised to make payment to any item not specified therein.

It cannot be gainsaid that the so-called 'legal fees' is not an item specif