JUDGMENTBY: JEMURI SERJAN (BORNEO) CJ (DELIVERING THE GROUNDS OF JUDGMENT OF THE COURT)

At the hearing of this appeal on 18 May 1993, we allowed the appeal with costs here and below and ordered the deposit to be refunded to the appellant, and indicated that we would give our reasons later. These are the grounds of our judgment.

In this case, the first and second defendants/respondents (the defendants), Jong Tze Khiok @ Yong Tze Kiok @ Jong Tsz Khiok and Yong Ng Fah, the registered proprietors of the land described as Lot 535, Block 9, Miri Concession Land District, charged the said land as security for banking facilities granted by Citibank NA, the plaintiff/appellant (the plaintiff), at the request of the defendants, to Yong Tze Kiok Co Sdn Bhd (the customer), up to an aggregate total amount not exceeding B$ 2m only (the principal sum). According to the terms of the charge, the defendants promised to pay the principal sum upon, and only upon, demand, and similarly, the balance, which at the date of such demand was still owing to the plaintiff by the customer, together with interest at the rate of 2% above the prime rate, was also to be paid upon, and only upon, demand.

The customer having defaulted, the plaintiff took out an originating summons for an order of sale of the charged land under s 148(2)(c) of the Sarawak Land Code (Cap 81) (the Code). In support of the originating summons, the vice-president of the plaintiff, Encik Cheng Hock Kian, by an affidavit affirmed on 12 September 1989, asserted that the appellant advanced, by way of letters of credit, a total sum of B$ 222,716.53 and granted and/or continued to grant overdraft facilities as well. The principal amount outstanding on the letters of credit as at 28 February 1989 was B$ 195,596.03 and the amount of interest in arrears was B$ 30,462.59, making a total outstanding of B$ 226,058.62 and the amount of interest charged on the said facility per day was B$ 38.84. The principal amount outstanding in respect of the overdraft facility as at 28 February 1989 was B$ 2,696,534.29 while the amount of accrued interests on the overdraft facility was B$ 570,147.83. The total amount of the principal sum with accrued interest outstanding was B$ 3,492,740.74.

The first defendant, on behalf of himself and the second defendant, filed two affidavits in opposition and raised several issues, some of which were irrelevant. What clearly emerged from his affidavits was the admission by the first defendant that he and the second defendant were shareholders of the customer and that the first defendant was its managing director. At the hearing in the High Court, counsel for the parties, however, agreed to submit for the determination of the court only three issues which they contended to be relevant to the application for the order under s 148(2)(c) of the Code. The three issues were:

(1) that the notice, exh CHK3 failed to comply with s 148 of the Code;

(2) that there was failure to serve such notice in accordance with s

208 of the Code; and

(3) that such notice was confusing, that is to say, whether it was

meant for the customer or for the defendants.

Having heard and considered the submissions of counsel for both parties, his Lordship dismissed the application on the grounds that the plaintiff had not established that the defendants defaulted in payment of the principal sum, interest and other moneys secured by the said charge, and that the notice to the defendants was not a good notice in law on account of non- compliance with the proviso to s 148(3) of the Code. The learned judge found favour with the defendants contention and so ruled accordingly. The relevant passage of the judgment for the purpose of convenience is hereby reproduced:

The proviso must be read as fixing a minimum statutory period of 30

days notice to be given; and if more (but not less) than 30 days

notice is to be given, it must be expressly stipul

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