United Malayan Banking Corp. Bhd. v.

Chong Bun Sun

@ Chang Bun Sun & Another Case
[1994] 2 CLJ Dr. Visu Sinnadurai J. 673

security for the relevant loan and the dissolu- a UNITED MALAYAN BANKING CORP.
tion of the injunction would ultimately mean BHD.
the loss of this security, it was my finding that
v.
the injunction should continue. I had accord-
ingly dismissed the defendant’s application to CHONG BUN SUN @ CHANG BUN SUN
set aside the writ of summons and statement & ANOTHER CASE
of claim and alternatively to set aside the
injunction with costs. b HIGH COURT, KUALA LUMPUR
DATO’ DR. VISU SINNADURAI J.
As for the application for security for costs, it [ORIGINATING SUMMONS
has been a matter of practice from the authori- NO. 31-2646-87]
ties on this point that a plaintiff out of the 9 MAY 1994
jurisdiction should give security for costs and
in the consequence, I had granted the order in LAND LAW: Foreclosure proceedings - Order for
terms of the defendant’s application for this c sale by public auction - Variation of order -
Whether Court had power to vary or set aside
with costs in the cause. However, RM250,000
order - Whether Court had power to order sale
was to my mind excessive and I had instead thereof by the chargee by way of private treaty -
fixed RM30,000, which I considered appropri- Whether Court functus officio after making order
ate in the circumstances, to be deposited within - National Land Code 1965 ss. 256, 257.
three weeks of the said order.
LAND LAW: Foreclosure proceedings - Right of
d chargor to sell charged property by private treaty
- Whether right accrued exclusively to chargor -
Whether chargor empowered to effectuate sale by
private treaty subsequent to an order for sale by
public auction - National Land Code s. 266.

LAND LAW: Foreclosure proceedings - Order for

e sale by public auction - Validity - Whether valid-
ity of order open to challenge by chargor after sale
of charged property to innocent purchaser con-
cluded.

PRACTICE & PROCEDURE: Foreclosure proceed-

ings - Order for sale by public auction - Fresh
action by chargor to revoke order - Whether
f chargor entitled to raise same issues as raised in
the foreclosure proceedings - Whether chargor
bound by res judicata and estoppel.

Pursuant to a successful foreclosure proceed-

ings the chargee in this case obtained a Court
order to sell the charged property by way of
g public auction under s. 257 National Land Code.
The property was subsequently put up for sale
as ordered but the exercise somehow failed to
attract any bidder and the property remained
unsold. The facts further showed that in one of
the two cases before the Court, the charged
h property remained unsold despite revision of
the reserved price and despite the chargee hav-
ing conducted no less than six public auctions to
try to effectuate the sale in that manner. Having
thus failed to carry out the sale in terms of the
Court order, the chargee applied to set aside the
earlier order for sale and sought a new order
i that the charged property be sold by way of
private treaty.
 Current Law Journal
674 June 1994 [1994] 2 CLJ

The issue that arose was whether under the a Court may direct the sale to be conducted. Order
circumstances, and bearing in mind the provi- 83 merely stipulates the procedural rules which
sions of s. 257 of the Code, the Court was the parties to a foreclosure action of a charged
empowered to set aside the order for sale by property need to comply with. The manner of
public auction it had earlier made and substi- sale and the details thereof are therefore gov-
tute therewith a new order granting the chargee erned by the Code, and in this respect the Code
the liberty to sell the charged property by way of only envisages one manner of sale which may be
private treaty. b ordered by the Court, and that is sale by public
auction.
Held:
[1] The National Land Code spells out in detail [5] Under certain circumstances and by virtue
the powers of the Court and the Court cannot act of s. 266 of the Code, a sale of charged property
beyond these powers. It follows that any pur- by way of private treaty, either before or after an
ported exercise of this power by granting a order for sale is made, is permissible at the
remedy not authorised by the National Land c instance of the chargor. There is nothing in the
Code would be ultra vires the Code, resulting in Code that prevents a chargor from selling the
the sale of the charged property being rendered charged property by private treaty as long as the
void and the registration of the title in the chargee’s interest is not adversely affected. It
purchaser’s name not being indefeasible. appears that until the sale of the charged prop-
erty to a third party at a public auction is
[2] Section 257 of the National Land Code
concluded, the chargor retains the right to dis-
confers a special statutory right on the chargee d
charge the charge by selling the charged prop-
to obtain an order for sale. This right is indepen-
erty, in which case the earlier order for sale
dent of any other causes of action which the
made by the Court ceases to have effect under s.
chargee may have against the chargor under the
266 of the Code.
charge or under any other law. Considering the
true nature of this statutory remedy, it is clear Obiter:
that, once an order for sale has been made by the [1] Practical difficulties may arise as a conse-
Court by way of a public auction under that e
quence of the view taken by this Court in this
section, the Court is no longer empowered to case but that appears to be the law and until the
make a subsequent order to vary or set aside the law is changed the Court is bound by it. Courts
earlier order and to make a new order for the do not have the power to change the law to suit
charged property to be sold by way of private practical inconveniences which may be caused
treaty. The fact is that as far as the National to certain parties. That is the duty of Parlia-
Land Code is concerned there is just no provi- f ment.
sion that enables the Court to order a sale of the
charged land by way of private treaty. [2] The Supreme Court decision in Kandiah
Peter v Public Bank Berhad [1994] 1 SCR 218
[3] The manner of sale as expressly provided that in foreclosure proceedings a chargor may
under s. 257 of the Code is only by way of sale by institute a subsequent writ action after the
public auction and no other. In the face of the order for sale has been made and that he may
strict requirement therein, it would be a clear raise therein similar facts and issues as that
g
usurpation of the legislative function if an order raised in the foreclosure proceedings, has far-
by way of private treaty is allowed. On this reaching consequences, and lawyers acting for
ground the argument of the chargee that this banks and other financial institutions may well
Court had the power to make such an order in be advised to bear this decision in mind when
exercise of its inherent jurisdiction or by virtue advising their clients as to whether an order for
of the powers given to it under s. 25(2) and Item sale ought to be sought on default by the chargee.
3 of the First Schedule to the Courts of Judica- h
ture Act 1964, cannot be sustained. [Application disallowed].
[4] It is now clearly established that in foreclo- Cases referred to:
sure proceedings of a charged property the Citibank v. Jong Tze Khiok [1993] 4 CLJ 325/[1993] 3
chargee must comply with the procedural rules MLJ 449 (refd)
set out in O. 83, Rules of the High Court 1980. Nira Sdn. Bhd. v. Malayan Banking Bhd. [1990] 1 CLJ
It should however be noted that O. 83, unlike 36/[1990] 1 SCR 154 (refd)
i
O. 31, does not state the manner in which the Citibank NA v. Ibrahim bin Othman [1994] 1 MLJ 608
(refd)
 United Malayan Banking Corp. Bhd. v. Chong Bun Sun
@ Chang Bun Sun & Another Case
[1994] 2 CLJ Dr. Visu Sinnadurai J. 675

M & J Frozen Food Sdn. Bhd. v. Siland Sdn. Bhd. a For the plaintiff/applicant - Anne Pang; M/s. Nordin
[1994] 1 SCR 197 (refd) Torji & Yusof Ahmad
Kandiah Peter v. Public Bank Berhad [1994] 1 SCR 218 For the defendant - In person
Lesco Development Corporation Sdn. Bhd. v. Malayan For Malaysian International Finance Bhd. - Krishna
Banking Society Bhd. [1987] CLJ 290/[1988] 2 MLJ Aiyar; M/s. Majid Krishna, Menon & Lee
84 (cit) For Gunung Jati Sdn. Bhd. - Jalilah Ahmad, on behalf
Bank Bumiputera Malaysia Bhd. v. Esah bte Abdul of the Official Assignee
Ghani [1985] 2 CLJ 409/[1986] 1 MLJ 16 (cit)
Hongkong & Shanghai Banking Corporation Ltd. v. b JUDGMENT
Wan Mohd bin Wan Ngah [1991] 3 MLJ 119 (refd)
Dr. Visu Sinnadurai J:
Co-operative Central Bank Bhd. v. Belaka Suria Sdn.
Bhd. [1991] 3 CLJ 2131/[1991] 3 MLJ 43 (refd) At the conclusion of the hearing of both these
NKM Properties Sdn. Bhd. v. Rakyat First Merchant applications, this Court ruled that the orders
Bankers Bhd. [1992] 3 CLJ 1680/[1993] 1 SCR 54 sought for the sale of the charged properties by
(cit) way of private treaties be refused, indicating
Malaysia Credit Finance Bhd. v. Yap Hock Choon & c that the reasons for the decision would be given
Anor [1989] 1 MLJ 232 (refd) subsequently in a written judgment. I now give
Malayan United Bank Bhd. v. Cheah Kim Yu (Beh Sai my reasons for refusing the orders.
Ming) [1991] 1 CLJ 280/[1991] 1 MLJ 313 (refd)
Chung Kiaw Bank Ltd. v. Lau Ah Yen & Anor [1989] 1 A short but important issue with far-reaching
CLJ 1065/[1989] 1 MLJ 247 (refd) practical consequences, particularly to banks
Keng Soon Finance Bhd. v. MK Retnam Holdings Sdn. and other financial institutions, arose for con-
Bhd. & Anor [1989] 1 CLJ 897/[1989] 1 SCR 291
d sideration in these applications. The question
(refd)
Gondola Motor Credit Sdn. Bhd. v. Almurisi Holdings
that arose in these two applications relates to
Sdn. Bhd. [1992] 4 CLJ 2212/[1993] 1 SCR 45 (refd) the chargee’s right to sell a charged land by way
James Edward Buxton & Anor v. Supreme Finance (M) of a private treaty, subsequent to the making of
Sdn. Bhd. [1992] 4 CLJ 1945/[1993] 1 SCR 74 (cit) an order for sale by the Court under s. 257 of the
Kuching Plaza Sdn. Bhd. v. Bank Bumiputera Malay- National Land Code. In both these applications,
sia Bhd. [1991] 3 CLJ 1702/[1992] 1 SCR 64 (cit) the chargee applied to the Court for an order to
United Malayan Banking Corporation Bhd. v. Syarikat e enable it to sell the charged property by way of
Perusahaan Luas Sdn. Bhd. (No. 2) [1988] 3 MLJ private treaty.
352 (refd)
Damodaran v. Vasudevan [1975] 2 MLJ 231 (not foll) The most common situation where a chargee
Damodaran v. Choe Kuan Him [1979] 1 MLJ 267 applies to Court for such an order to enable it to
(refd) sell the charged property by way of a private
Mui Bank Bhd. v. Cheam Kim yu (Bah Sai Ming as
treaty is when, pursuant to s. 256 of the Na-
intervener) [1992] 4 CLJ 2229/[1993] 2 SCR 188
(refd)
f tional Land Code, an order had been made by
Chartered Bank v. Packiri Maideen & Anor [1963] the Court to sell the charged property by way of
MLJ 276 (refd) a public auction, but the chargee is unable to do
Eng Ah Mooi & Ors v. Overseas Banking Corporation so, as the property could not be sold at the public
Ltd. [1983] 1 MLJ 209 (refd) auction at a specified reserved price.
Malayan United Finance Bhd. v. Tan Lay Soo [1991] 2
CLJ 899/[1991] 1 SCR 105 (refd) The National Land Code provides that on the
Hock Hua Bank v. Sahari bin Murid [1981] 1 MLJ 143 g default by a chargor, a chargee may obtain an
(refd) order for the sale of the charged land: s. 253(1).
Malayan United Finance Bhd. v. Adsonii (M) Sdn. If the chargee intends to pursue this remedy, the
Bhd. [1990] 2 CLJ 254 (refd) chargee, under the provisions of the National
Ker Chee Chuan v. Katlyn Enterptise (M) Sdn. Bhd. Land Code, must comply with certain require-
[1991] 1 CLJ 250/[1991] 1 SCR 352 (refd)
ments as spelt out by the Code. Only when all
United Malayan Banking Corp Bhd. v. Syarikat
Perumahan Luas Sdn. Bhd. (No. 1) [1988] 1 CLJ such requirements have been complied with,
h can an application for an order for sale be made
577/[1988] 1 MLJ 546 (refd)
Sindoma Realty Sdn. Bhd. v. Overseas Chinese Bank- to the Courts: see generally the recent Supreme
ing Corp [1989] 1 CLJ 246/[1989] 1 MLJ 377 (cit) Court decision in Citibank v. Jong Tze Khiok
[1993] 3 MLJ 449, as to some of these procedures
Legislation referred to:
which need to be complied with by the chargee
National Land Code 1965, ss. 253(1), 257, 256(2), (3),
265, 266, 417(1) under the Sarawak Land Code (Chapter 81),
Rules of the High Court 1980, Orders 31, 83 i and the earlier Supreme Court decision in Nira
Sarawak Land Code (Chapter 81) Sdn. Bhd. v. Malayan Banking Bhd. [1990] 1
Courts of Judicature Act 1964 SCR 154.
 Current Law Journal
676 June 1994 [1994] 2 CLJ

The chargee also needs to comply with the a a ‘statutory right’ conferred on the chargee by
requirements of O. 83 of the Rules of the Court the National Land Code. Wan Yahya SCJ in M
1980: see the recent judgment of Shankar J. in & J Frozen Food Sdn. Bhd. v. Siland Sdn. Bhd.
Citibank NA v. Ibrahim bin Othman [1994] 1 [1994] 1 SCR 197, described this right of the
MLJ 608. The requirement that the chargee chargee as follows (at p. 214):
must comply with the procedural rules (the
The order for sale confers on the chargee, only
relevant provisions of the Rules of the High the statutory right to a judicial sale. A sale
Court 1980) is also spelt out in s. 256(2) of the b
under s. 256 or 260 of the National Land Code
National Land Code which reads as follows: is a judicial sale ordered by the Court on the
Any application for an order for sale under application of the chargee.
this Chapter by a chargee of any such land or The point that needs emphasis is that, the
lease shall be made to the Court in accordance
remedy of the chargee under the National Land
with the provisions in that behalf of any law for
the time being in force relating to civil proce-
Code is a special remedy. The action brought by
c the chargee, and the adjudication of it by the
dure.
Courts, are different to that when other causes
Section 256(3) provides that on any such appli- of action are instituted by the chargee. The
cation, and if satisfied, that there is no cause to Supreme Court in the recent decision of Kandiah
the contrary, the Court shall order the sale of the Peter v. Public Bank Berhad [1994] 1 SCR 218
land. I shall revert to this section in the later had the occasion to make the following com-
part of this judgment. ments:
d
In so making the order for sale, certain matters A chargee who makes an application for an
need to be dealt with by the Court. Under s. 257 order for sale in foreclosure proceedings under
of the National Land Code every order for sale s. 256 of the Code does not commence an action.
made by the Court shall provide as follows: He merely enforces his rights as a chargee by
exercising his statutory remedy against the
(a) provide for the sale to be by public auction; chargor in default. The chargee, therefore,
(b) require the sale to be held on, or as soon as e does not sue for a debt. It is also clear that his
may be after, a date specified therein, being claim for an order for sale is not based upon a
convenant but under the registered charge.
a date not less than one month after the
The order for sale when made under s. 256 of
date on which the order is made; the Code is not a judgment or a decree. The
(c) specify the total amount due to the chargee Court hearing the application for foreclosure
at the date on which the order is made; and does not make, and in any event ought not to
(d) require the Registrar of the Court to fix a make, any adjudication upon any substantive
reserve price for the purpose of the sale, f issue.
being a price equal to the estimated market
Other actions by chargee
value of the land or lease in question.
The chargee may, if he so chooses, besides
The Court may also make such other directions
resorting to this statutory right, pursue any
with respect to the sale as the Court thinks fit,
other cause of action against the chargor for the
especially where the charge in question relates
g money lent to the chargor. He may sue for a debt,
to more than one piece of land: s. 257(2).
or on a guarantee (if any), or on the contract. As
I state these provisions of the National Land to whether a chargee may institute an action on
Code so as to appreciate the true nature of the the guarantee and also commence foreclosure
chargee’s right to seek an order for sale under proceedings, see the Supreme Court decisions
the provisions of the Code. in Lesco Development Corporation Sdn. Bhd. v.
Malayan Banking Society Bhd. [1988] 2 MLJ 84,
It is clear from these provisions of the Code that
h and Bank Bumiputera Malaysia Bhd. v. Esah
the law confers a special statutory right on the
bte Abdul Ghani [1986] 1 MLJ 16.
chargee to obtain an order for sale. This right of
the chargee is independent of any other causes The difference between a foreclosure action
of action which the chargee may have against brought by a chargee for an order for sale, and
the chargor under the charge, or under any a civil suit based on a guarantee has been
other law. The remedy of the chargee to obtain considered in a number of cases. For example, in
an order for sale may therefore be described as i Hongkong & Shanghai Banking Corporation
 United Malayan Banking Corp. Bhd. v. Chong Bun Sun
@ Chang Bun Sun & Another Case
[1994] 2 CLJ Dr. Visu Sinnadurai J. 677

Ltd. v. Wan Mohd bin Wan Ngah [1991] 3 MLJ a conducted (as to the powers of the Registrar to
119, Lamin J. observed as follows (at p. 121): fix a new reserve price, see NKM Properties Sdn.
Bhd. v. Rakyat First Merchant Bankers Bhd.
The guarantee is just another security inde-
pendent of the charge carrying with it its own [1993] 1 SCR 54). Following this procedure, in
terms and conditions to bind the guarantor and one of the cases before this Court, six public
failure to comply with any of them will consti- auctions were conducted, and all of them proved
tute a breach which will form the basis for the to be abortive.
issuance of a writ. b
Strictly speaking, of course, under s. 259(2)(c),
His Lordship further observed (at p. 122): the reserve price may be reduced to any amount,
so as to enable the chargee to dispose of the
In all the cases cited above where the loan was
secured by two collateral security, namely, a property at subsequent public auctions. Unlike
charge and a guarantee, our Courts generally a public auction conducted by the land adminis-
have taken the view that it is not required to trator under s. 265(2), where only two public
realise the security under the charge before c auctions may be conducted, there is no limit
enforcing the guarantee. stated in the Code as to the number of public
auctions which may be conducted in respect of
Similarly in Co-operative Central Bank Bhd. v.
an order for sale made under s. 257. However,
Belaka Suria Sdn. Bhd. [1991] 3 MLJ 43, Lim
if the reserve price is reduced to too low a sum,
Beng Choon J. observed (at p. 47):
it may adversely affect both the chargor’s and
... apart from its common law right to sue the the chargee’s rights.
borrower, guarantors, and chargor for the re- d
covery of the debt, the plaintiff [the chargee But difficulties may still arise, when after a
bank] is also given the statutory right to sell the series of public auctions, the property remains
charged property by order of the Court pursu- undisposed. It is in these circumstances that the
ant to s. 256(2) of the National Land Code. ... chargee applies to the Court to set aside the
earlier order for sale and seeks a new order that
To re-emphasise this point, His Lordship added
the said property be sold by way of private
(at p. 47): e treaty.
In principal, therefore, a chargee has the
right to institute an action for recovery of the Sale by private treaty
debt and also a right to assert a power of sale on There is no express provision in the National
the incumbered property; the two actions are
Land Code enabling the Court to order a sale of
not the same.
the charged land by way of private treaty.
One situation in which a chargee may pursue f Section 257 of the National Land Code only
more than one remedy is when the charged empowers the Court to make an order for the
property sold at the public auction realises less sale of the charged property by way of a public
than the amount owing to the chargee. In such auction. However, I am given to understand
a case, the chargee will then attempt to institute that, it is the practice of some Courts to make
a separate action for the recovery of the balance such orders for sale by public treaty after earlier
of the sum attempts to sell the said land by private auc-
g tions have been unsuccessful. For example, in
Sale by public auction
Malaysia Credit Finance Bhd. v. Yaw Hock
Where an order for sale has been ordered by the Choon & Anor. [1989] 1 MLJ 232 and in
Court, certain practical problems, may arise, as Malayan United Bank Bhd. v. Cheah Kim Yu
is the situation in these two applications before (Beh Sai Ming) [1991] 1 MLJ 313, (the latter
this Court, when there is no bidder at the public case being reversed by the Supreme Court, on
auction to purchase the property at the reserved different grounds, see [1993] 2 SCR 188), Abdul
h Malek J., in both these cases allowed an appli-
price fixed by the Registrar, and as a conse-
quence the property remains unsold. In such cation for the sale of the land by way of private
cases, the general practice has been for the treaty subsequent to the making of an order for
chargee to make an application to the Registrar the sale of the charged property by way of public
to revise the reserved price, and if the Registrar auction.
is so satisfied, a new reserved price is then
However, in the case of Chung Khiaw Bank Ltd.
stipulated and another public auction is i v. Lau Ah Yen & Anor. [1989] 1 MLJ 247, Wan
 Current Law Journal
678 June 1994 [1994] 2 CLJ

Adnan J. in the High Court expressed strong a Oliver speaking of the powers of the Court in an
reservations as to whether the Court had the application for sale of the charged property
power to order the sale of the charged land by under s. 256, observed (at p. 299):
way of private treaty even under s. 265(3)(c) of
Section 256(3) of the National Land Code is
the National Land. Wan Adnan J. observed (at mandatory. The Court shall order a sale unless
p. 249): it is satisfied of the existence of cause to the
It is my view that the Court has no power to contrary. Granted that these words have been
b construed in Malaysia as justifying the with-
order [a] sale by private treaty even under s.
265(3)(c) of the National Land Code. ‘To make holding of an order where to make one would be
such other order as it may think just’, to my contrary to some rule of law or equity, they
mind, does not include the power to [a] order clearly cannot extend to enabling the Court to
refuse relief simply because it feels sorry for
sale by private treaty.
the borrower or because it regards the lender
These observations, however, were made by as arrogant, boorish on unmannerly.
Wan Adnan J in relationship to an application c
In Gondola Motor Credit Sdn. Bhd. v. Almurisi
made to the Court for an order for sale of a land
Holdings Sdn. Bhd. [1993] 1 SCR 45, Harun
office title under s. 265(3) of the National Land
Hashim SCJ in delivering the judgment of the
Code, after the sale by public auction of the land
Supreme Court also observed as follows (at p.
as ordered by the land administrator had been
50):
unsuccessful. The application before Wan Adnan
J., it must be emphasised, was not to an appli- Under s. 256(3), on an application to Court for
cation made under s. 256 of the National Land
d an order for sale oy the chargee, it is manda-
Code. Under s. 256(3)(c), unlike that as provided tory on the Court to order the sale unless it is
satisfied of the existence of a cause to the
for under s. 263(2)(a), the Court may either
contrary.
make an order for sale by way of public auction
under s. 256, or it may ‘make such other order The only leeway given to the Court, when con-
as it may think just’. His Lordship stated that sidering whether an order for sale ought to be
the words ‘such other order’ in s. 265(3) did not e made is that provided for under s. 256(3) which
empower the Court to make an order for sale by provides that the Court may not grant an order
way of private treaty, but merely allowed the for sale if there is ‘any cause to the contrary’. The
Court to direct the land administrator to con- Privy Council in Keng Soon Finance, clearly
duct another public auction of the land at a stated that the Courts may only refuse to make
reduced reserved price. such an order if the making of the order would
be contrary to some rule of law or equity: see the
I need not make any comments on the scope of f Supreme Court decisions in James Edward
s. 265(3)(c), as it is not relevant for the purposes
Buxton & Anor v. Supreme Finance (M) Sdn. Bhd.
of the present applications. These applications,
[1993] 1 SCR 74, where the scope of s. 256(3) was
before me concern orders for sale made by the
also considered, and Kuching Plaza Sdn. Bhd. v.
Court under s. 257.
Bank Bumiputra Malaysia Bhd. [1992] 1 SCR
Considering the true nature of the statutory 64, where a similar provision in the Sarawak
remedy of the chargee to apply for an order for Land Code (Chapter 81) was applied.
g
sale under s. 257 of the National Land Code, this
The National Land Code spells out in detail the
Court is of the view that once an order for sale
powers of the Court. These are statutory powers
has been made by the Court by way of a public
and the Court cannot act beyond these powers.
auction under s. 257 of the National Land Code,
Any purported exercise of this power by grant-
the Court does not have the power to make a
ing a remedy not authorised by the National
subsequent order to vary or set aside the earlier
Land Code would be ultra vires the Code, result-
order, and to make a new order for the charged h ing in the sale of the charged property being
property to be sold by way of private treaty.
rendered void, and the registration of the title in
It is the view of this Court that in an application the purchaser’s name not being indefeasible on
for an order for sale under s. 256, the Court must the ground that the registration was obtained
make an order for sale, and such sale must be by by means of an insufficient or void instrument:
way of a public auction and no other. In Keng see the judgment of Edgar Joseph Jr. J. (as he
Soon Finance Bhd. v. MK Retnam Holdings i then was) in United Malayan Banking Corpora-
Sdn. Bhd. & Anor. [1989] 1 SCR 291, Lord tion Bhd. v. Syarikat Perusahaan Luas Sdn.
 United Malayan Banking Corp. Bhd. v. Chong Bun Sun
@ Chang Bun Sun & Another Case
[1994] 2 CLJ Dr. Visu Sinnadurai J. 679

Bhd. (No. 2) [1988] 3 MLJ 352, approved by the a Vasudevan (where no appeal was brought to the
Supreme Court in M & J Frozen Food v. Siland Privy Council), in the course of his judgment,
Sdn. Bhd. [1994] 1 SCR 197. when called upon to invoke s. 417(1) of the
National Land Code for purposes of registration
I therefore hold that the Court is not empowered
of a lis pendens observed (at p. 270):
to order a sale by private treaty in an application
by the chargee made under s. 257 of the National The National Land Code makes no provision
Land Code. for the registration of a lis pendens. Counsel ...
b
has drawn their Lordships’ attention to s. 417(1)
Powers of the Court to order sale by pri- of the National Land Code ... . But this, in their
vate treaty outside the provisions of the Lordships’ view does not authorise the Court to
National Land Code direct the registrar to make on the register
entries of a land for which no express provision
It was, however, argued before me that, if the is made by the National Land Code and which
Court did not have the power to order a sale by are inconsistent with the whole scheme of the
private treaty under s. 257 of the National Land c Act.
Code, then this Court had the power to do so
Lord Diplock further concluded (at p. 270):
either in exercise of its inherent jurisdiction, or
by virtue of the powers given to it under s. 25(2) It follows that in their Lordships’ view, the
and Item 3 of the First Schedule of the Courts of entry on the register of an order of lis pendens
Judicature Act (Act 91). For this purpose, the is a mere brutum fulmen. Even if it be lawful to
make such an entry at all, it serves no useful
decision of Federal Court in Damodaran v.
d purpose and their Lordships would suggest
Vasudevan [1975] 2 MLJ 231, was relied upon. that the precedent set by Damodaran v.
In that case, the Federal Court held that though Vasudevan [1975] 2 MLJ 231 is one which
there was no machinery for the registration of a ought not to be followed.
lis pendens under the provisions of the National
Land Code, s. 25(2) and item 6 of the First I am therefore of the view that considering the
Schedule to the Courts of Judicature Act em- express provision of s. 257(a), no question arises
powered it to do so. e as to the Court making an order for the sale of
the charged property by way of private treaty by
Having given careful consideration to these invoking its inherent jurisdiction, or, for that
submissions, and in considering the nature of matter, by the application of any other powers
the statutory order for sale under the provisions conferred upon the Court by any other statutes,
of the National Land Code, I am unable to for example, the Courts of Judicature Act.
concede to the arguments of Counsel for the
chargee. The Code itself expressly provides for In this connection, s. 447 of the National Land
f
the manner of sale which the Court ought to Code, a provision which is often overlooked,
make under s. 257 - a sale by public auction. So needs comment. Section 447 provides as fol-
strict is this requirement, that s. 257(a), does lows:
not provide for any other method of sale. In the (1) Nothing in this Act shall affect the opera-
face of this express provision, it would be a clear tion of any rules of Court; and, if any provision
usurpation of the legislative function, if an order of this Act is inconsistent with any provision of
by way of private treaty is allowed. g any rules of Court, the latter provision shall
prevail and the former provision shall, to the
There are also other dangers when the Court extend of the inconsistency, be void.
takes it upon itself to grant other remedies
which are not expressly provided for by the It may be said that the effect of this provision is
National Land Code. An example of such an that if any rule of Court provides for a sale in
approach is the decision the Federal Court in pursuant to an order for sale of a charged
Damodaran v. Vasudevan, where the Federal h property to be held by way of a private treaty,
Court gave recognition to lis pendens when it is that provision in the rules of the Court will
not provided for in the National Land Code. This prevail over the provisions of the Code, so as to
approach adopted by the Federal Court was entitle the chargee to apply for the order for sale
subsequently, the subject matter of much criti- by way of a private treaty.
cism by the Privy Council. Lord Diplock, in The relevant rules of the Court, for the present
Damodaran v. Choe Kuan Him [1979] 1 MLJ purposes are the Rules of the High Court 1980,
267, a related case to that of Damodaran v. i
particularly O. 83. It is now clearly established
 Current Law Journal
680 June 1994 [1994] 2 CLJ

that in foreclosure proceedings of a charged a Cheam Kim Yu (Bah Sai Ming as intervener)
property, the chargee must comply with the [1993] 2 SCR 188 observed (at p. 195):
procedural rules set out in O. 83, and not O. 31.
Under the National Land Code, there is noth-
As pointed out earlier, s. 256(2) of the National ing to prevent a chargor with the consent of the
Land Code itself provides that an application to chargee to sell the charged property by private
Court for an order for sale under s. 257 must be treaty. There are no specific provisions in the
“in accordance with the provisions ... in force Code for such a sale. But if such a sale is
relating to civil procedure.” However, it should b concluded as a purely business arrangement, it
be noted that O. 83, unlike O. 31, does not state is for the chargee to discharge the charge to
the manner in which the Court may direct the give full effect to the sale.
sale to be conducted. Order 83 merely stipulates (Emphasis added)
the procedural rules which the parties to a This right of the chargor to sell by private treaty
foreclosure action of a charged property need to was also emphasised by Wan Adnan J. in Chung
comply with. The manner of the sale, and the c Khiaw Bank Ltd. v. Lau Ah Yen & Anor. [1989]
details thereof are therefore, governed by the 2 MLJ 247, where his Lordship observed (at p.
Code. As seen earlier, the Code only envisages 249):
one manner of sale which may be ordered by the
Court - sale by public auction: This is unlike the In my view the Court may allow a chargor of
any land to sell the land in question by private
position where an action is commenced for the
treaty in circumstances where the Court is
sale of property, not charged under the provi- satisfied that the proceeds of such sale are not
sions of the National Land Code. In such limited d less than the amount due to the chargee under
circumstances, O. 31 of the Rules of the High the charge and that the chargee will be duly
Court 1980 is applicable, where under r. 4, it is paid in full out of the said proceeds.
expressly provided that the Court in effecting (Emphasis added)
the sale of the property may fix:
So long as the chargee’s interest are not ad-
the manner of sale: whether by contract con- versely affected, there appears to be no reason
ditional on the approval of the Court, private as to why a chargor does not have the right to sell
e
treaty, public auction, tender or some other the charged land before an order for sale has
manner. been made. As will be seen later, even after an
(Emphasis added) order for sale has been made, the chargor may
This condition, and the others stated in r. 4 of sell the property by way of private treaty. In
O. 31 are clearly inconsistent with s. 257 of the both these situations, however, it is prudent for
National Land Code. It is for this reason, that it the chargor to obtain the consent of the chargee.
has consistently been held by the Courts that f
In this respect, attention should be drawn to the
O. 31 is inapplicable in cases of actions brought earlier decisions of Gill J. in the Chartered Bank
under s. 256 of the National Land Code. v. Packiri Maideen & Anor. [1963] MLJ 276, and
Having held that the Court has no power to of the Federal Court in Eng Ah Mooi & Ors. v.
order the sale of the charged property by way of Overseas Banking Corporation Ltd. [1983] 1
a private treaty in an application under s. 257 of MLJ 209, (this decision was criticised on some
the National Land Code, I hasten to add that a g other grounds by the Supreme Court in the
sale of a charged property by way of private subsequent case of Malayan United Finance
treaty, may under certain other circumstances, Bhd. v. Tan Lay Soon [1991] 1 SCR 105). In both
be permissible. There are certain circumstances these decisions, the Court pointed out that the
under which a sale by private treaty may be chargor may only sell the charged property by
conducted by the chargor, and I shall consider way of private treaty prior to the commence-
two such situations briefly. ment of any foreclosure proceedings by the
h chargee. However, the decisions in these two
(a) Right of chargor to sell the charged cases may be explained on the ground that in
property by private treaty before an both the cases the Courts were concerned with
order for sale the sale, by the chargor of the charged property,
A chargor may, before an order for sale has by private treaty without the prior consent of
been made and with the consent of the chargee, the chargee. Those decisions, therefore, merely
sell the charged property by way of private i hold that anytime prior to the commencement of
treaty. Harun Hashim SCJ in Mui Bank Bhd. v. the foreclosure proceedings, the chargor, may
 United Malayan Banking Corp. Bhd. v. Chong Bun Sun
@ Chang Bun Sun & Another Case
[1994] 2 CLJ Dr. Visu Sinnadurai J. 681

without the consent of the chargee, sell the a progress, but before a bid has been accepted, he
charged property by way of private treaty. This still retains the right to tender payment of the
the chargor may do in exercise of his rights as amount which he owed the chargee (which may
be less than the value of the land on sale) and
the registered proprietor of the land, though the
call off the sale; s. 266 National Land Code. The
sale must be made subject to the existing charge. exercise of such rights does not appear to us to
(b) Right of chargor to sell by private be consistent with a proprietor who has surren-
dered absolutely his rights over the land to
treaty after an order for sale b another.
Section 266(1) of the National Land Code pro-
The Supreme Court in M & J Frozen Food Sdn.
vides that the chargor, against whom an order
Bhd. above held that the chargor retained his
for sale has been made may, at any time before
rights and interests in the land even after an
the conclusion of the sale, tender the money
order for sale had been made by the Court. Wan
owing to the chargee. The said section reads as
Yahaya SCJ, in discussing the ambit of the
follows: c chargor’s rights observed (at p. 213):
Any chargor against whom an order for sale
has been made under this Chapter may, at any The chargor does not abrogate all his rights to
time before the conclusion of the sale, tender the chargee at the making of the order for sale.
the amounts specified in sub-section (2) to the He is merely compelled to abide by the Court’s
Registrar of the Court or, as the case may be, order for his property to be sold in accordance
Land Administrator (or, if the tender is made with the statutory safeguards on his interest as
on the day fixed for the sale, to the officer provided under ss. 257 and 258.
d
having the direction thereof), and the order
His Lordship added (at p. 213):
shall thereupon cease to have effect.
... the divesting of the chargor’s right occurs
This provision is in line with the principle that only on completion of the contract of sale and
the chargor always retains a right to discharge conveyance ... .
a charge: see Mohd Jemuri SCJ (as he then was)
in Malayan United Finance Bhd. v. Tan Lay Soo It therefore appears that until the sale of the
e charged property to a third party at a public
[1991] 1 SCR 105, at p. 114.
auction is concluded, the chargor retains the
The most obvious manner in which the chargor right to discharge the charge by selling the
may tender the money owing to the chargee is charged property. If the chargor decides to do so,
for the chargor to repay the chargee the out- it is, however, prudent for the chargor to obtain
standing loan, including interest thereon, which the consent of the chargee. It would be most
the chargor had borrowed. This the chargor may unusual for the chargee, in such circumstances
do either by obtaining the funds to repay the f
to refuse consent, for after all, a sale by private
loan from some other independent source, or by treaty by the chargor, with the consent of the
selling the charged property to a third party. In chargee cannot adversely affect the chargee, so
the latter situation, the chargor may enter into long as the chargee is repaid the sum owing. In
a private treaty with a third party to purchase such a situation, strictly speaking, there is no
the charged property. The chargor, in such a necessity for the chargor to apply to the Court
situation may, from the proceeds of this sale, g for any order, especially when the consent of the
tender the said sum owing to the chargee. chargee has been obtained. The earlier order for
There appears to be no local decision clearly sale made by the Court ceases to have effect
dealing with the issue as to whether the chargor under s. 266 of the National Land Code.
may sell the charged property by way of private Other Issues
treaty after an order for sale has been ordered.
However, the recent decision of the Supreme Though this judgment deals primarily with the
h main issue as of whether the Court may order a
Court in M & J Frozen Food Sdn. Bhd. v. Siland
Sendirian Berhad [1994] 1 SCR 197, appears to sale by private treaty after an order for sale by
lend weight to the argument that the chargor public auction had been made, there are a
still retains such a right. Wan Yahya SCJ ob- number of other related issues which have also
served (at p. 214): been canvassed before me with regard to the role
of the Courts in such foreclosure actions. I shall
Even after the order of sale has been made
i now deal with these issues.
and when the auction sale was already in
 Current Law Journal
682 June 1994 [1994] 2 CLJ

Whether Judge is functus officio after a Bank’s case, after an order for sale had been
granting an order for sale drawn and perfected, the chargor, instead of
appealing against the order, applied to the same
The Code seems to envisage that once an order
Court by way of notice of motion to set aside the
for sale has been made by the Court, the duties
order. The grounds upon which he sought to set
of the Court come to an end. Thereafter, all other
aside the earlier order was precisely the same
steps that need to be taken to complete the sale
grounds as that stated in his earlier affidavit in
of the charged property is undertaken by the b opposition to the order for sale being made. The
registrar of the Court or by an officer of the Court
Judge at first instance, after hearing argu-
(ss. 258 and 259).
ments, then set aside his own earlier order for
That the functions of a Judge making an order sale. As found by the then Federal Court, the
for sale comes to an end once an order has been Judge, however, did not consider whether:
made, has been emphasised by the court in a he was functus officio. Nor that the applica-
number of cases. In the more recent decision of c tion to set aside the order was made in the same
the Supreme Court in Mui Bank Bhd. v. Cheam proceedings and after the order had been drawn
Kim Yu (Beh Sai Ming, intervener) [1993] 1 SCR up. He did not appear to realise that the order
188, Harun Hashim SCJ observed (at p. 195): was made on an inter-partes application. He
rejected the contention of Counsel for the
Indeed, following Hock Hua Bank v. Sahari chargee that the only way to set aside such an
bin Murid [1981] 1 MLJ 143, FC, the learned order was by a fresh action if, inter alia,
Judge was functus officio after he made the grounded on fraud. He thought that since the
order for sale on 29 August 1988. In the Hock d matter had not been adjudicated and the Court
Hua case, the allegations of fraud and forgery had not pronounced a judgment upon the mer-
were made after the Judge had made the order its or by consent, he had the power to do what
for sale but before the auction sale and the he did. [1981] 1 MLJ 143 at p. 144.
Federal Court held that the Judge was functus
officio after he made the order for sale in The Federal Court, held that the Judge was
foreclosure proceedings when the order had wrong in entertaining the second application to
been drawn up and perfected. e set aside the earlier order made by him. Chang
His Lordship then continued (at p. 195): Min Tat FJ in delivering the judgment of the
Federal Court held (at p. 144):
True, after making the order for sale, the
judge has the power to make other orders Clearly the Court has no power under any
including changes in the reserve price and the application in the same action to alter, vary or
auction sale dates but such orders are conse- set aside a judgment regularly obtained after
quential to the order sale. The point here is that it had been entered or an order after it is drawn
f up, except under the slip rule ... unless it is a
the order for sale is a final order unless ap-
pealed against. Once the order for sale is made, judgment by default, or made in the absence of
drawn up and perfected, as here, the learned a party at the trial or hearing.
Judge is functus officio and therefore has no
The Federal Court, however, pointed out that a
power to set aside the order for sale.
party may bring a fresh action to impeach the
In Mui Bank’s case, after the chargee bank had original judgment, if the earlier judgment or
obtained an order for sale, the chargor offered g order for sale had been obtained by “fraud or
the charged property for sale to a third party by when further evidence, which could not possibly
way of a private treaty. At the same time, the have been adduced at the original hearing, is
charged property was sold at a public auction in forthcoming”. In the instant case, the Federal
pursuance to the order for sale obtained by the Court held that, the Judge instead of hearing
bank. The third party applied to intervene in the the application on the notice of motion which
proceedings, and the Supreme Court held that was based on the same grounds as that ad-
as the application to intervene was made after h vanced earlier to set aside the earlier order,
the certificate of sale had been issued to the ought to have dismissed it and “left it to the
purchaser at the public auction, the Judge could [chargor] to commence a fresh action to set aside
not entertain the application for intervention as the foreclosure order on the ground of fraud”.
by that stage he was already functus officio. Chang Min Tat FJ pointed out (at p. 144):
In Hock Hua Bank Bhd. v. Sahari bin Murid [the Judge] had the same material before him
[1981] 1 MLJ 143, the decision of the Federal i at the first foreclosure proceeding and quite
Court relied upon by Harun Hashim SCJ in Mui clearly he should have considered himself
 United Malayan Banking Corp. Bhd. v. Chong Bun Sun
@ Chang Bun Sun & Another Case
[1994] 2 CLJ Dr. Visu Sinnadurai J. 683

functus officio after having considered the con- a Subsequent Actions by Chargor to set aside
tentions raised at these [the subsequent] pro- order for sale
ceedings and refused to do anything about it on
the ground of lack of jurisdiction .... Closely related to the issue of functus officio, is
the other issue as to whether a chargor may
The decision of the Supreme Court in Mui Bank bring another ‘action’ seeking to set aside an
Bhd. and the then Federal Court in Hock Hua earlier order for sale made by the Court. Though
Bank, clearly indicate that, except under cer- this question has arisen in a number of cases,
b
tain circumstances, the Court which had earlier the exact position of the law remains unsettled.
made an order for sale, is not empowered to
entertain any application or action by the chargor In Hock Hua Bank’s case, as stated earlier, the
seeking to set aside the earlier order. Federal Court held that if a chargor, after an
order for sale had been made, intended to chal-
A different approach was, however, taken by the lenge the validity of the order on the grounds of
Supreme Court in a recent decision. In Kandiah fraud or the availability of new evidence, the
Peter v. Public Bank Bhd. [1994] 1 SCR 28, c
chargor ought to commence a fresh action. In
where a similar issue as that considered in Hock such a situation, if the order for sale had been
Hua Bank arose, the question of functus officio, drawn up and perfected, the chargor ought to
however, was not raised or alluded to. I shall seek a stay of the foreclosure proceedings until
revert to this decision shortly. after the hearing of the fresh action.
Finally, on the issue of functus officio, I should The Federal Court, however, did not consider
point out that the application of this rule does d
the position, whether the chargor may still be in
not prohibit the Court in making consequential a position to commence a fresh action after a
orders to the order for sale already made. In Mui public auction had been conducted in pursuance
Bank Bhd. v. Cheam Kim Yu [19931 2 SCR 188, to the order for sale, and the charged property
Harun Hashim SCJ, whilst pointing out that had been bought by a purchaser at the auction.
the Court after making an order for sale was However, the decision of the Supreme Court in
functus officio, added (at p. 195): Ker Chee Chuan v. Katlyn Enterprise (M) Sdn.
e
... after making an order for sale, the Judge Bhd. [1991] 1 SCR 352, appears to suggest that
had the power to make other orders including the chargor may still challenge the validity of
changes in the reserve price and the auction the order for sale made in the foreclosure pro-
sales dates, but such orders are consequential ceedings, even after the property had been
to the order for sale. bought by an innocent purchaser at the public
Similarly in Malayan United Finance Bhd. v. auction, and a certificate of sale being issued in
f favour of the purchaser.
Adsonii (M) Sdn. Bhd. [1990] 2 CLJ 254, Edgar
Joseph Jr. J. (as he then was) in holding that the In Ker Chee Chuan’s case, the chargor, chal-
senior assistant registrar, had jurisdiction to lenged the validity of the order for sale on the
make an order, consequential to the order for grounds that the order for sale was made by the
sale made under s. 256 of the National Land Court pursuant to a judgment in default of
Code, that the chargee be permitted to bid at the appearance entered against the company, and
auction, observed (at p. 255): g that the writ and the subsequent processes for
The principle of functus officio cannot possi- the sale of the land had not been served on it. In
bly apply to consequential orders. other words, Ker Chee Chuan’s case was one
where an order for sale was made on an ex-parte
As I have already taken the view earlier that basis.
this Court is not empowered to make an order
for the sale of the charged land by way of private To this extent, Ker Chee Chuan’s case may be
treaty, the issue of whether this Court is functus h distinguished from Hock Hua Bank’s case, where
officio after an order for sale has been made, the order for sale was made on an inter-partes
need not be addressed by me in this judgment. application. I emphasise this distinction as to
However, without deciding on this issue, if the whether the order for sale was made on an inter-
principle of functus officio is applicable to the partes application or on an ex-parte application,
instant case, that appears to be added reason as as some of the decisions seem to suggest that, if
to why this Court is unable to make an order for it was made on an ex-parte application, the
the sale of the charged property by way of
i chargor may subsequently apply to set aside the
private treaty.
 Current Law Journal
684 June 1994 [1994] 2 CLJ

order for sale, in an application to revoke the ex- a recent decision of the Supreme Court in Kandiah
parte order. In such a situation, the question of Peter v. Public Bank Bhd., above goes much
whether the Judge is functus officio does not further by holding that a chargor, may, after the
arise. Such was the situation in United order for sale has been granted in a foreclosure
Ma layan Banking Corp. Bhd. v. Syarikat proceedings, commence a writ action, based on
Perumahan Luas Sdn. Bhd. (No. 1) [1988] 1 the same grounds as that in opposition to the
MLJ 546, where Edgar Joseph Jr. J. (as he then making of the order in the foreclosure proceed-
was), overruled the preliminary objection that b ings, irrespective of any of the aforesaid circum-
the Court was functus officio once the order for stances. Eusoff Chin SCJ in delivering the judg-
sale was perfected, and that the chargor’s rem- ment of the Supreme Court held as follows (at p.
edy was only by way of appeal, and not by way 222):
of summons-in-chambers (see, however the
In our judgment, where a chargor raises
views of Abu Mansor J. in Sindoma Realty Sdn. issues and relies upon facts to show ‘cause to
Bhd. v. Overseas Chinese Banking Corp. [1989] c the contrary” in proceedings brought by the
1 MLJ 377. chargee under s. 256 of the Code, he is not
barred from bringing a fresh action against the
The position of the innocent purchaser who chargee (notwithstanding that an order for
purchases the charged property at a public sale has been made) and raising in that action
auction, and the rights of the chargor after the the same or similar facts and issues as those
order for sale had been made was considered in raised by him in the foreclosure proceedings.
detail in the recent decision of the Supreme Neither res judicata nor cause of action estop-
d pel nor issues estopped are available answers
Court in M & J Frozen Food Sdn. Bhd. v. Siland
Sdn. Bhd. [1994] 1 SCR 197, where the Supreme to the chargee to meet the chargor’s action.
Court held until the stage where the chargor This decision of the Supreme Court has now
had divested himself of his proprietary rights been interpreted by some to mean that, even
(that is, until the payment of the full purchase after an order for sale had been made, there is
price), the chargor may intervene to set aside nothing to prevent the chargor from having a
the sale conducted in pursuance to a foreclosure e second bite at the same cherry by once again
proceedings in the event of fraud, impropriety or commencing an action to oppose the making of
breach of any statutory or contractual terms of the order. A wide interpretation of the Supreme
the sale. In that case, the Supreme Court dealt Court decision would mean that the chargor’s
with a situation where the chargor challenged right to commence a fresh action is not limited
the validity of the sale of the charged property to the tentative specified circumstances stated
to a purchaser at the public auction on the above. The Supreme Court, by holding that the
grounds that the terms of the sale had not been f chargor may institute a subsequent action, “rais-
complied with, and as such the purchaser could ing the same or similar facts and issues as those
not obtain an indefeasible title on registration. raised in the foreclosure proceedings”, appears
The tentative principles, therefore which may to be opening the floodgates to allow chargors to
be extracted from the above cases seem to be as challenge the order for sale made by the Court,
follows: (a) a chargor may bring a subsequent not by way of an appeal to the Supreme Court,
action to challenge the order for sale, if the g but by commencing an action before the same
subsequent action is based on fraud, or fresh Court.
evidence: Hock Hua Bank’s case; (b) where an The danger of so opening the floodgate is obvi-
order for sale has been made ex-parte, the ous: There will be no finality in the order for sale
chargor may apply to revoke the order for sale so made by a Court in foreclosure proceedings, and
made: Ker Chee Chuan’s case, and UMBC v. the rights of the purchaser at the auction sale
Syarikat Perumahan Luas (No 1); (c) where no may never be secure, as it is always open to
notice had been given to the chargor of any h
challenge by the chargor at anytime, for what-
change to the terms or conditions of sale at the ever reasons, including those which had been
public auction, the chargor may apply to set rejected by the Court in the earlier foreclosure
aside the sale to the purchaser: M & J Frozen. proceedings.
Though these situations appear to be the cir- The extent to which of the decision of the Su-
cumstances under which a chargor may subse- preme Court in Kandiah Peter affects the cur-
quently challenge the earlier order for sale, the i
rent law and practice relating to foreclosure
 Y.A.M. Tengku Ali Ibni Almarhum Sultan Ismail v.
Kerajaan Negeri Terengganu Darul Iman
[1994] 2 CLJ Haji Idris Bin Yusoff J. 685

proceedings, remains to be seen. However, I a Y.A.M. TENGKU ALI IBNI ALMARHUM

must state that that decision has already been SULTAN ISMAIL
cited before me in support of various proposi-
v.
tions, including that of saying that a Judge,
after making an order for sale is not functus KERAJAAN NEGERI TERENGGANU
officio; and that a date for the public auction DARUL IMAN
ordered in pursuance of the order for sale made
by the Court in the foreclosure proceedings, b HIGH COURT, KUALA TERENGGANU
ought not to be made until after it was certain DATO' HAJI IDRIS BIN YUSOFF J.
that the chargor was not intending to challenge [CIVIL SUIT NO. 21-52-1992]
the order for sale in a subsequent action. 5 DECEMBER 1993
As none of these propositions are directly rel- JURISDICTION: Application by plaintiff for a
evant for the purposes of the present applica- declaration that he was the Sultan of
tion, I express no views on the decision. But, I c Terengganu from 1942 to 1945 - Whether mat-
may add, that the decision has far-reaching ters complained of justiciable - Whether Court
consequences, and lawyers acting for banks and has jurisdiction to entertain action - Whether
Court forum non conveniens.
other financial institutions, may well be advised
to bear this decision in mind when advising PRACTICE & PROCEDURE: Rules of the High
their clients as to whether and order for sale Court 1980 - O. 15 r. 16 - Power of Court to make
ought to be sought on default by the chargee. binding declarations of right - Whether provision
d thereof applicable - Filing of unconditional ap-
Certainly, the decision appears to go much
further then what was decided in the earlier pearance to claim - Effect - Whether tantamount
cases. As already stated, the earlier cases seem to submission to jurisdiction of Court.
to indicate that the chargor who is dissatisfied
PRACTICE & PROCEDURE: Unpleaded issues -
with the decision of the Court in making an Defence of limitation under Public Authorities
order for sale, may either appeal against the Protection Act 1948 - Defence not expressly
decision of the Court in ordering the order for e raised in pleading - Whether defence maintain-
sale, or he may challenge the sale to a third party able - Whether defence of limitation by itself
pursuant to the order for sale on the ground that sufficient ground for invoking O. 18 r. 19 RHC.
the sale was improperly conducted, as was the
situation in M & J Frosen Food Sdn. Bhd. The plaintiff applied for a declaration that he
was the Sultan of the State of Terengganu for
It is hoped that the Supreme Court in the very the period 26 September 1942 to 5 November
near future will have the opportunity to recon- f 1945, for payment of a life allowance of RM1500
sider these issues and cases and restate the a month by the defendant with effect from
principles applicable, so that the present confu- November 1945 and for provision of a residence
sion and uncertainties in the law would be befitting his station of life as provided for in
overcome. Chapter 18, Laws of the Constitution of the
Conclusion: State of Terengganu, 1911. The defendant re-
sisted the application and subsequently entered
Practical difficulties may arise as a consequence g an unconditional appearance to the suit. The
of the view I have taken of a sale by way of defendant later applied under O. 18 r. 19(1)(a)
private treaty of a charged property after an Rules of the High Court, 1980 by way of sum-
order for sale has been granted by the Courts. mons-in-chambers for the striking out the claim
But that appears to be the law, and until the law on the grounds:
is changed, I am bound by the law. Courts do not
have the power to change the law to suit practi- (1) that the claim disclosed no cause of action;
cal inconveniences which may arise to certain h (2) that the matters complained of were not
parties. That is the duty of Parliament. justiciable thereby giving the Court no
jurisdiction to entertain the action;
(3) that the action was time barred by virtue of
the Limitation Act 1953 and the Public
Authorities Protection Act 1948; and
(4) that the Court in this case was forum non
i conveniens and that the matter, rightly