A chargee must prove compliance with procedural requirements and demonstrate cause to the contrary in order to successfully apply for an order for sale under the National Land Code.

Jeffrey Tan J:

Essentially, this is the plaintiff/chargee's application (encl. 2) for an order for sale, under s. 256 of the National Land Code 1965 (Code), of the 2nd defendant/3rd party chargor's land held under Geran 21213 for Lot 426, Seksyen 4, Bandar Georgetown, Daerah Timur, Pulau Pinang (hereinafter referred to as the said land).

The pertinent background facts, as could be expected in a charge action, are as follows. As said, the 2nd defendant is the registered proprietor of the said land. The plaintiff agreed, by an agreement dated 21 December 1996 (exh. "CCH2") between the plaintiff as lender of the one part and the 1st defendant as borrower of the other part, and in consideration, inter alia, of the security of a third party first legal charge over the said land, to grant various banking facilities, subject to the limit of RM5,700,000, to the 1st defendant. Pursuant to the terms of said agreement, the 2nd defendant created, on 21 December 1996, a third party first legal charge (Gadaian bertarikh 21 December 1996 Perserahan No. 24564/96 Jilid 721 Folio 6) over the said land in favour of the plaintiff. By the same said charge, the 2nd defendant as principal debtor covenanted, inter alia, "to pay and satisfy the (plaintiff) on demand, in full all monies which are owing and payable by the (1st defendant) under the said agreement or such amount thereof as may be outstanding under the agreement including all whatever interest, costs and charges ... ."

And as in other charge actions, the plaintiff asserted, in the affidavit (encl. 1) affirmed by one Chee Chin Hoe on 22 September 1998, in support of the application, that the 1st and 2nd defendants had defaulted on the charge. According to the facts asserted in encl. 1, (i) the plaintiff demanded from the defendants and from three other guarantors (Fong Wa Tan, Ng Sim Hock & Koh Aun Choo), by notice of demand dated 19 August 1998 (exh. "CCH4"), for the payment within 14 days of the sum of RM4,277,151.30 (the sum allegedly owing on the 1st defendant's overdraft account as at 1 August 1998) together with interest thereon, (ii) the plaintiff notified the defendants and three guarantors, that legal proceedings for recovery would be commenced against them, if payment was not made, (iii) the defendants failed, refused and or neglected to comply with the said notice of demand, (iv) the plaintiff issued the statutory notice of default with respect to a charge, dated 8 September 1998 (exh. "CCH5"), to the 2nd defendant, and, that the defendants failed, refused and or neglected to comply with the said statutory notice. According to the latest affidavit (encl. 9) filed by the plaintiff, the outstanding principal and interest, as at this day, 7 May 1999, is RM4,690,233.06.

But unlike most other contested charge actions, the defendants elected not to file any affidavit evidence. Mr Kiley Tan, for the defendants, raised instead the following issues to weather the plaintiff's application. Referring to O. 83 r. 3(3)(b) of the Rules of the High Court 1980, he said that encl. 1 must state the r. 3(3) particulars and prove that money is due and payable. He also said, (i) that the plaintiff had not proved that money is due and payable, (ii) that the plaintiff "has not shown the interest as at the date of issue of the originating summons", (iii) that encl. 1 (the supporting affidavit) is defective, as it has not complied with O. 83 r. 3(3)(c), and, (iv) that encl. 1, since it was affirmed before the originating summons was filed, is not an affidavit. With regard to his submission that encl. 1 is not an affidavit, Mr Tan submitted the High Court decision of Arab Malaysian Finance (M) Bhd. v. Serajudin bin Mohd Ismail [1999] 6 CLJ Supp 405; 1998 MarsdenLR 2262 . "Rules must be followed", he said. "In Penang High Court 22-777-1998, a related action between this plaintiff, the defendants here and three guarantors, one of the defendants is alleging fraud and illegality. If the court sho