The court upheld the validity of judicial sales conducted by the bank, affirming the defendant's rights as a legal chargee despite claims of improper service and timing issues raised by the plaintiffs.

JUDGMENT

Has Zanah Mehat JCA:

Introduction

[1] The appellants filed the Originating Summons (OS) in the High Court to inter alia, challenge the foreclosure of two properties by the defendant bank. The High Court dismissed the appellants' claim. This is the appellant's (1st and 2nd plaintiffs in the High Court) appeal. For convenience, the parties shall be referred to as they were in the High Court.

Salient Facts

[2] In 2005, the 1st and 2nd plaintiffs obtained a housing loan of RM90,971.00 from the defendant ('Housing Loan') to finance the purchase of an apartment. The Housing Loan was secured under a Deed of Agreement over the apartment.

[3] In 2009, the defendant granted to Lakudang (M) Sdn Bhd ('Lakudang') a fixed loan, an overdraft facility and a trade bills facility amounting in total to RM1.1m (collectively referred to as 'Business Facilities'). The Business Facilities were secured by (i) guarantees by the 1st plaintiff and one Tan Cheong Yuen, (ii) a charge created by the 1st and 2nd plaintiffs over a double-storey house ('Penang Property') located in Bayan Lepas, Penang ('Penang Charge'), and (iii) a charge created by the 1st plaintiff and one Tan Cheong Sin over a double-storey house ('Kedah Property') located in Alor Setar, Kedah ('Kedah Charge').

[4] In 2013, due to Lakudang's default under the Business Facilities, the defendant took out action against Lakudang and the plaintiffs for the recovery of the monies due and owing and foreclosure proceedings to enforce the Penang and Kedah Charges. Meanwhile, the defendant had consolidated the outstanding amounts due under the Housing Loan and the Business Facilities.

[5] In 2014, the defendant obtained summary judgment against Lakudang, the 1st plaintiff and Tan Cheong Yuen in the Taiping High Court for the recovery of monies due under the Business Facilities.

[6] On 19 February 2014, the defendant obtained an Order For Sale pursuant to the Kedah Charge over the Kedah Property at the Alor Setar Land Office. The Kedah Property was successfully auctioned off in 2016 for RM498,000.00.

[7] On 20 May 2014, the defendant obtained an Order For Sale pursuant to the Penang Charge for the Penang Property at the Penang High Court. The Penang Property was only successfully auctioned off in 2016 for RM931,500.00.

[8] Meanwhile, unbeknown to the defendant, Lakudang was wound-up on 21 July 2014 and the 1st plaintiff was adjudged a bankrupt on 2 September 2014.

The High Court Action

[9] In 2017, the plaintiffs filed an OS in the High Court at Taiping seeking to set aside the Orders For Sale of the Kedah and Penang Properties including other reliefs. The plaintiff's action was dismissed by the High Court on the following grounds.

a) The defendant was entitled to consolidate the accounts held by the plaintiffs under the Housing Loan and the Business Facilities pursuant to the various security documents between the plaintiffs and the defendant;

b) The defendant was not obliged to accept the plaintiffs' request for the Kedah and Penang Properties to be sold by way of private treaty because the defendant qua chargee was entitled to foreclose on the properties;

c) The defendant was entitled to claim interest on the Business Facilities because the Orders For Sale were obtained before the dates on which the 1st plaintiff was adjudged a bankrupt and Lakudang was wound-up; and

d) Based on the documentary evidence, the plaintiffs were in fact represented by the legal firm of Teoh Saw & Associates.

Submission Of Counsel

[10] Learned counsel for the plaintiffs raised the following main points. First, it was submitted that the charged properties were auctioned after the six month timeline under s 8(2A) of the Bankruptcy Act 1967 (BA 1967). As such, the defendant was not entitled to charge interest on the outstanding amounts (Pilecon Realty Sdn Bhd v. Public Bank Berhad & Ors And Other Appeals, [2013] 2 CLJ 893; AmBank (M) Bhd v. Abdul Rahim Osman; [2014] 10 CLJ 173). Therefore, the amounts stated in the statements of ac