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22 of 51 DOCUMENTS

[2008] MLJU 0180

© 2008 LexisNexis Asia (a division of Reed Elsevier (S) Pte Ltd)

Malayan Unreported Judgments

Malayan Banking Berhad v Zainal Abidin bin Abdullah and Anor

HIGH COURT (SHAH ALAM)

ORIGINATING SUMMONS NO MT3-24-991-2004

DECIDED-DATE-1: 31 MARCH 2008

Rosnaini bt Saub, J

JUDGMENTBY: Rosnaini bt Saub, J

[1] In this foreclosure proceeding, the plaintiff applies for an order for sale for the property held under H.S. (D)
4906, P.L No. 3357, Mukim Sepang, Daerah Sepang, Selangor ('the said property'). The said property was charged to
the plaintiff by the defendants vide a charge under the National Land Code ('NLC') under Presentation No. 28011/2000,
Jilid No. 51, Folio No.38 as security for a Al-Bai Bifhamin Ajil ('BBA') banking facility. The order for sale sought by
the plaintiff pursuant to its right as chargee under s. 256 of the NLC is to recover a sum of RM224717.62 due and
owing by the defendants as at 5.12.2006 - see plaintiff's Afidavit Tambahan (End. 9).

[2] The BBA" facility amount granted by the plaintiff to the defendants was RM87,278.00 for the purpose of
financing the purchase of the property by the plaintiff from the vendor. As it is with an Islamic BBA facility, the
plaintiff then sold the said property back to the defendants at the sale price of RM241,595.93 to be paid by'"33?
monthly instalments. The charge in respect of the said property executed by the. defendants in favour of the plaintif was
to secure the repayment of the said sale price.

[3] The defendants defaulted in the repayment of the sale price and the plaintiff had issued and served a notice of
demand, vide its solicitors letter dated 22.10.2003 on the defendants recalling the entire facility and demanding payment
of the balance sale price. Subsequently, the plaintiff issued and served the statutory notice, Form 160 of the NLC, on the
defendants. The Form 16D dated 19.3.2004 gave the defendants seven (7) days to remedy the default and/or breach.
Needless to say, the defendants had failed to comply with the same' and hence this application by the plaintiff for an
order for sale against the said property.

[4] The 2nd defendant has filed an affidavit opposing the plaintiff's application. Two Issues or points of contention
were raised by the 2nd defendants. The first is challenging the correctness of the amount claimed by the plaintiff as due
and owing under the charge. The second is in respect of the Form 160 that the 2nd defendant is saying is defective.
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[5] I shall fake the point regarding the Form 160 first. It is the 2nd defendant's counsel submission that the Form
16D is not in compliance with s. 254(1) of the NLC and Section 6.02 of the Charge Annexure because the Form 16D
gave the chargors, i.e. the defendants, only seven (7) days to remedy the default. Section 254(1) of the NLC specifies
that a period of one month or 'such alternative period as may be specified in the charge' be given to the chargor to
remedy the breach. In our present case the alternative period stipulated under the charge is 14 days, not 7 days. The
counsel for the 2nd defendant contended that due to this non-compliance, the Form 16D is a nullity and therefore the
application for an order for sale must be rejected and dismissed.

[6] The plaintiff's counsel on the other hand submitted that such non-compliance was a mere irregularity and does
not .affect the validity of the Form 16D. Plaintiff's counsel also stressed that the defendants have had ample time to
comply with the Form 16D notice and the defendants were never misled by the said notice. Several case authorities
were referred to by the plaintiff's counsel in support of his argument and I shall refer to some of these authorities later in
my decision.

[7] It is not in dispute that the remedial period stipulated in the Form 16D dated 19.3.2004 in the present case is 7
days. As pointed out correctly by the 2nd defendant's counsel, section 6.02 of the Charge Annexure, however,
specifically states that the remedial period given to the defendant is 14 days. It is without doubf that the Form 16D has
not complied with section 6.02 of the Charge Annexure. I am of the opinion that the remedial period, i.e. the time period
requires for the chargor to remedy the breach or default, s an important and vital ingredient or element of the Form 16D
notice. The law requires the chargee, i.e. the plaintiff in the present case, to comply strictly with such a provision.

[8] I have given consideration to all the case authorities quoted by the plaintiff's counsel pertaining to his
argument on the Form 16D. With respect, I think those case authorities are either not relevant or inapplicable to our
present case. For instance, the case of Tan Kai Kok v Thor Teik Seng [1935] MLJ 91 is an old case that was decided
before the NLC was enacted. The case of Syarikat Kewangan Melayu Raya Bhd v Malayan Banking Berhad [1984] 1
MU 115 relates to a situation where the Form 16D was issued for default under two separate charges in respect of the
same land and the Federal Court held that the Form 16D was valid. Therefore, the issue in that case is very different
from our present case. In Tengah Really (M) Sdn Bhd v Skyvale Sdn Bhd & Satu Lagi [2007] 2 CLJ 648 and United
Overseas Bank (Malaysia) Bhd v Soon Kin Fah & Anor [2001] 7 CU 54 , the irregularity in question was not about non
compliance of the remedial period in the Form 160 but about other technical irregularity. So these cases are not
applicable to our present case.

[9] In our present case, it is my judgment that the non-compliance of the 14 day period os stipulated by section
6.02 of the Charge Annexure is fatal to the Form 160. As such the Form 16D is also in contravention of s. 254(1) of the
NLC. It must be noted that the 7 days period given to the defendants as chargor to remedy the breach as stated in the
Form 16D fell short of the required 14 days and this is prejudicial to the defendants' right. I therefore hold that the said
Form 16D is defective and null and void.

[10] In the off-quoted case of Low Lee Hian v Ban Hfn Lee Bank Bhd [1997] 2 CLJ 36 , it was held by the then
Supreme Court that a chargor may show cause to the contrary within s. 256(3) of the NLC by demonstrating that the
chargee has failed to meet the conditions precedent for making an application for an order for sale. As the Form 16D Is
an important pre-requisite for such an application and that in our present case the said Form 16D is defective, then it is
clear that the plaintiff's application for an order for sale is without a valid foundation. In other words, the 2nd defendant
has shown that there is a cause to the contrary to defeat the plaintiff's application.

[11] On this ground alone if is sufficient for this court to dismiss the plaintiff's application.

[12] But there is also another reason why the plaintiff's application for an order for sale herein should be
dismissed. And this relates to the issue of the amount allegedly due and owing by the defendants. The plaintiff's claim is
based on the whole outstanding amount of the sale price under the BBA facility, i.e. the sale price under the Property
Sale Agreement. As held by Abdul Wahab Patail, J in Affin Bank Berhad v Zulkifli Abdullah [2006] 1 CLJ 438 , such
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computation is not proper and accurate as it took into account the profits from the unexpired tenure of the BBA facility.
Plaintiff's counsel urged me not to follow that case but suffice it to say, I find the learned judge reasoning and
explanation in that case sound and reasonable. To my mind, it will be unconscionable for the plaintiff to claim for the
realisation of the full balance sale price when the full tenure of the facility has not yet expired. The plaintiff should
therefore follow the approach stated in Afffn Bank's case (supra) when computing the amount due and outstanding by
the defendants under the charge.

[13] In conclusion, I hereby find that the 2nd defendant has sufficiently shown cause to the contrary to defeat the
plaintiff's application for an order for sale. However, it needs to be mentioned that the plaintiff is free to institute a fresh
foreclosure proceeding against the said property by issuing and serving a new and proper Form 16D on the defendants -
see Low Lee Man's case (supra).

[14] In the premises, I hereby dismiss the plaintiff's application herein with costs.

Sri Dev Nair (Guna Papoo with him) (Guna & Associates) for the 2nd defendant
Hairul Azam (CL Lim (Azam Lim & Pang) for the plaintiff

LOAD-DATE: 05/08/2008

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