Low Hop Bing J:

Consolidation Of Proceedings

There are two concurrent proceedings before me viz a charge action vide OS 24(31)-31-1987 ("the charge action") filed by the plaintiff Oriental Bank Bhd, now known as EON Bank Bhd ("EON Bank") against the defendant Hotel Flamingo Sdn. Bhd ("Hotel Flamingo") for an order for sale under s. 256 of the National Land Code 1965; and civil suit vide CS No. 22-39-1986 ("the civil suit") filed by Hotel Flamingo against, inter alia, EON Bank for declaratory reliefs and damages.

Both the proceedings had been consolidated and heard by way of a full trial.

Finding Of Facts

Prior to the transactions between EON Bank and Hotel Flamingo, Scotch Leasing Sdn. Bhd. ("Scotch Leasing") had given certain loans to Hotel Flamingo. By way of security, Hotel Flamingo had executed, inter alia, a power of attorney dated 25 May 1984 in favour of one Quah Lian Eng ("the PA from Hotel Flamingo to Quah"). Quah was a nominee of Scotch Leasing and also a director of Lamont Trading. The PA from Hotel Flamingo to Quah concerns Hotel Flamingo's property held under ACT No. 238, Town Area XIX, district of Melaka Tengah ("the property").

The PA from Hotel Flamingo to Quah gave Quah the power to "charge or mortgage our said property and for this purpose to sign all necessary charges and other documents" (cl. 12); and to "substitute and appoint from time to time one or more attorney or attorneys with the same or limited powers and such substitute or substitutes at pleasure to remove and appoint another or others to appoint" (cl. 17).

On 15 November 1985, Scotch Leasing filed a claim against Hotel Flamingo vide Kuala Lumpur High Court (Commercial Division) C.S. No. C7520-1985.

In order to settle the dispute between the aforesaid parties, Scotch Leasing, Lamont Trading and a director of Scotch Leasing, one Maung Hong Kong @ Lim Yong Sai ("Maung"), made representations to Hotel Flamingo to enter into a tripartite agreement but the tripartite agreement did not eventuate.

On 19 April 1986, EON Bank gave Lamont Trading the following banking facilities:

1. overdraft of RM500,000; and

2. letters of credit, trust receipt and banker's acceptance amounting to RM1.5 million.

On 28 April 1986, Maung executed a third party charge ("the charge") on the authority of the power of attorney dated 1 November 1985 granted by Quah to Maung ("the first PA from Quah to Maung"). Upon the presentation of the charge on 7 May 1986, it was rejected by the land office allegedly on the ground that both the PA from Hotel Flamingo to Quah and the PA from Quah to Maung did not give Maung such authority.

On 7 May 1986, Quah as Hotel Flamingo's representative granted Maung another power of attorney ("the second PA from Quah to Maung") on the basis of the PA from Hotel Flamingo to Quah.

The second PA from Quah to Maung expressly stated that Quah had appointed Maung "as a substituted attorney for Hotel Flamingo Sdn Bhd and to be its attorney for it and in its name or otherwise to do all things" relating to the property.

Pursuant to the second PA from Quah to Maung, amendments were made to the charge, in particular the capacity in which Maung had executed the charge ie, "as Attorney for Hotel Flamingo Sdn Bhd", vide "Power of Attorney Jilid 22 Folio 1", the date of attestation by solicitors from "28 April 1986" to

"9 May 1986". No amendment was made to the property and the loan sum.

EON Bank's solicitor SD1 testified that she had prepared the charge instrument on 28 April 1986. Subsequently she did the above amendments and initialled thereon in the presence of Maung. Upon second presentation, the charge was accepted by the land office vide presentation No. 1251/86 Jilid No. 265 Folio 33. She explained that Maung did not have to initial as she had initialled on all amendments as the attesting solicitor.

SP3, the assistant land administrator in the Melaka registry of titles, testified that the rejected charge instrument dated 28 April 1986 c