Mohamed Yusoff SCJ

(delivering the judgment of the court): The chargor, the first appellant in SCCA 02-336-90 (hereinafter referred to as 'the first appellant') and the four interveners who were purchasers (hereinafter referred to as 'the second to fifth appellants') of shop lots in the charged land comprising a building known as Kuching Plaza appealed against the order for sale granted to Bank Bumiputra Malaysia Bhd (hereinafter referred to as 'the respondent') by the learned judge under s 148(2)(c) of the Sarawak Land Code (Cap 81). Both of these appeals were consolidated at the hearing.

The facts relevant to the issue in both the appeals are as follows. The first appellant borrowed a sum of $5m from the respondent, at its Kuching Branch in 1979 to build the Kuching Plaza ('the Plaza'), on lot 16 section 30, Kuching Town Land District on the term that the land was to be secured by way of first legal charge for the loan. The memorandum of charge was duly executed and registered as Instrument No L 10145/1979 on 10 October 1979.

The term of payment of the loan stipulated by the respondent was that the redemption of title would be at $40,000 per shop lot calculated on the basis of $5m divided by 128 shop lots to be sold by the first appellant. It was also a condition stipulated by the respondent that in the absence of strata titles to the shop lots a request for release of loans to individual purchasers would be construed as a request for the discharge of title and that the redemption of $40,000 per title would then apply.

The basis of the building approval of the Plaza by the state government to the first appellant was that strata titles would be issued by the Land Office only upon completion of all the three phases of the building, the shopping centre, the podium and a tower block. In 1979 only the shopping centre has been completed and between that date to 1985 some 122 lots in the shopping centre had been sold to various purchasers. The second to fifth appellants were among them.

The second appellant purchased two shops, lots 143 and 144 on 19 August 1983. He obtained a loan from the Bank of Commerce Sdn Bhd. By an arrangement with the respondent, the bank on 6 October 1983 released the redemption sum of $80,000 direct to the respondent for the two shop lots on behalf of the second appellant. Consequently, the respondent issued a letter of undertaking that the strata titles for the two lots would be released to the Bank of Commerce.

The third, fourth and fifth appellants together purchased one shop lot No 236 on 13 October 1980. They obtained a loan from the respondent in the sum of $109,900. On 19 May 1981 the third to fifth appellants requested the respondent to release the redemption sum of $40,000 from the loan for the discharge of the shop lot from the main charge in accordance with the respondent's stipulation. By 28 December 1983, the whole loan was settled by the third to fifth appellants.

It is not disputed that the second to fifth appellants have been in possession of these shop lots since their purchase.

On 14 January 1987, the respondent contended that the loan remained unpaid by the first appellant was $1,531,858.86 with interest chargeable at 14.75% per annum. The respondent demanded payment from the first appellant but there was no reply.

On 31 March 1987 upon statutory notice served on the first appellant the respondent applied for order for sale. The sale was to include the shop lots already sold to the second to fifth appellants.

The learned judge dealt with the issue by determining on the indefeasible interest of the respondent on the charged land as registered proprietor as provided in s 132 of Sarawak Land Code. Referring to the section in his judgment the learned judge states:

However, it is clearly established in law that upon registration of a charge the party in whose favour the registration has been effected will obtain an indefeasible title to or interest in the land. (See Tai Lee Finance