A lender's rights under an absolute assignment of land survive the issuance of title, allowing for private sale without creating a charge.

[1] The subject matter of the present appeal concerns a piece of land known as Lot No 2, Jalan Lingkaran 1, Fasa 11A, Bhg 2, Peringkat 1, Kawasan Perusahaan Selat Kelang, Pelabuhan Kelang, Selangor ("the land") which was to be alienated by the State Government of Selangor to Perbandaran Kemajuan Negeri Selangor ("PKNS").

[2] Pending the issue of a document of title to the land, PKNS entered into an agreement to lease dated 28 November 1988 ("the principal agreement") with the appellant thereby granting a lease over the land to the appellant for a period of thirty years commencing from 28 December 1988 and expiring on 28 December 2018 ("the lease").

[3] In 1990, the appellant obtained loans of RM1.2 million and RM750,000.00 from Bank Buruh (Malaysia) Berhad ("BBMB").

[4] As security for the repayment of the loans, a Loan Agreement Cum Assignment dated 16 April 1990 ("LACA") was executed by the appellant thereby assigning absolutely all its rights, title and interest under the principal agreement in favour of BBMB.

[5] On 11 March 1995, BBMB changed its name to BSN Commercial Bank (Malaysia) Berhad and its business and assets were subsequently transferred to and vested into the respondent ("the bank") pursuant to a Vesting Order dated 18 December 2000.

[6] In 2003, unknown to the bank, title to the land was issued and registered in the name of PKNS.

[7] At about the same time, the appellant defaulted in its payment obligations under the said loans and became indebted to the bank in the total sum of RM1,311,631.48 as at 30 September 2003 with interest thereon from 1 October 2003 to date of full settlement. A judgment on that debt was obtained against the appellant on 26 February 2004.

[8] In the circumstances, the bank in exercise of its rights under the LACA conducted a public auction on 28 December 2005 and sold its rights, title and interest under the Principal Agreement to one Asia Route (M) Sdn Bhd ("the purchaser"), who was the only bidder, at the reserved price of RM1.8 million.

[9] Since, by then, the land had been already registered in the name of PKNS, the bank informed PKNS of the same. By letter dated 19 April 2006, PKNS gave its approval to the bank's aforesaid sale and was prepared to sign its consent to the purchaser, provided that the deed of assignment by way of transfer was forwarded to PKNS.

[10] On the same day, ie on 19 April 2006, the appellant filed the originating summons in the High Court seeking inter alia the following reliefs against the bank:

(a) a declaration that the bank had no right to enforce the loan agreements, the LACA and the Power of Attorney concerned;

(b) an order and declaration that the sale by the bank was ultra vires the National Land Code ;

(c) an order that the auction sale on 28 December 2005 to be set aside.

[11] It was the appellant's case that once the individual title was issued, the bank could not sell its rights to the land under the principal agreement and the LACA, but must first execute a legal charge over the title and effect a sale pursuant to the National Land Code (" NLC ").

[12] The bank, however, took the position that it was fully entitled to exercise its powers under the LACA and sell its rights under the principal agreement and to the land by way of a further assignment, without resorting to the statutory remedy route, ie having to create a charge and subsequent to that, to file a foreclosure action, as provided under the NLC .

[13] On 27 September 2010, the appellant's application was allowed by the High Court. The High Court relied primarily on previous High Courts' decisions of Ooi Chin Nee v. Citibank Bhd , 2003 MarsdenLR 1