1. Indran a/l Karuppiah [No. K/P: 580801-10-6267] v 1. RHB Bank Berhad [6171-M] (22NCVC-171-06/2020)

INDRAN A/L KARUPPIAH … PLAINTIFFS [NRIC NO.: 580801-10-6267]

CHITRA SELVI A/P S. VELLASAMY [NRIC NO.: 720419-14-5440]

RHB BANK BERHAD (6171-M) …

POUN KOK HING [NRIC NO.: 910525-10-5167]

PENTADBIR TANAH HULU LANGAT

This is an action brought by the plaintiffs against the defendants arising from the auction of their property under section 260 of the National Land Code 1965. The plaintiffs seek the following reliefs in the statement of claim: “a. Suatu deklarasi bahawa lelongan hartanah tersebut yang dijalankan pada 25.5.2017 di Pejabat Tanah dan 2 Daerah Hulu Langat adalah salah di sisi undang-undang dan adalah terbatal; b. Suatu deklarasi bahawa plaintiff pertama merupakan pemilik ½ bahagian hartanah tersebut yang sah di sisi undang-undang; c. Suatu deklarasi bahawa plaintiff kedua merupakan pemilik ½ bahagian hartanah tersebut yang sah dari sisi undang-undang; d. Suatu injuksi mandatori perintah kepada Pentadbir Tanah Hulu Langat Defendan ke 3 untuk mengeluarkan dokumen keluaran hakmilik hartanah tersebut di atas nama plaintif pertama dan plaintif kedua dengan ½ bahagian masing-masing; e. Sebagai alternative kepada relif-relif di perenggan 33(b), (c) dan (d) di atas, gantirugi khas terhadap defendan pertama sebanyak RM40,000.00; f. Gantirugi Am terhadap defendan pertama; g. Gantirugi teruk terhadap defendan pertama; h. Kos; dan i. Lain-lain perintah dan/atau relif yang difikirkan wajar dan adil oleh Mahkamah yang mulia ini.” 3

The first defendant applied to have the plaintiffs writ and statement of claim dated 31 May 2020 struck out pursuant to Order 18 Rule 19 (1) (a) (b) and/or (d) of the Rules of Court 2012 (“ROC”). The application was supported by two affidavits dated 3 September 2020 and 5 October 2020, respectively. The first plaintiff filed an affidavit dated 25 September 2020 on his and the second plaintiff’s behalf to resist the application. Background Facts 3. The affidavits filed by the parties reveal the background facts that have led to the dispute between the parties. The plaintiffs jointly purchased a property in Hulu Langat, Selangor. The price of the property was paid fully by a housing loan obtained by the plaintiffs from the the first defendant. The loan was secured by a charge created by the plaintiff over the property.

The plaintiffs defaulted in the repayment of the housing loan. Whereupon, the first defendant applied under section 261 of the National Land Code 1965 to the Hulu Langat Land Office to obtain an order for sale of the property. The third defendant, the land administrator, fixed the matter for inquiry on three dates, namely 22 September 2016, 15 December 2016 and 20 April 2017.

The first plaintiff attended the first inquiry and informed the third defendant that he was in the process of selling the property to the second defendant for RM470,000.00. The inquiry was thus adjourned. 4

The plaintiffs, however, did not attend the second and third inquiry. On the date of the third inquiry i.e. on 20 April 2017, the first defendant obtained an ex parte order for sale from the third defendant who directed that the property be sold by public auction on 25 May 2017 at the reserve price of RM430,000.00.

On 16 May 2017, the first plaintiff went to the first defendant’s headquarters at Capital Square, Kuala Lumpur to obtain confirmation on the arrears outstanding and the first defendant’s officer by the name of Wan Asniza. The officer handed him a note where she had written RM14,389.01 as being the arrears, the information of the first defendant’s solicitors in charge of this case, and the requirement to pay RM300.00 to the land office to call off the auction. It bears mention that the amount of RM300.00 mentioned in the handwritten note was incorrect as the sum is RM3,000.00.

On the following day, i.e. on 17 May 2017, the first plaintiff went to the first defendant’s branch in Indan Pandah at about 3.37 pm to settle the arrears. However, the first defendant’s officer refused to accept payment on the basis that the plaintiffs loan account was frozen and that the timeframe to settle the arrears had expired.

The property was auctioned off to the second defendant on 25 May 2017 for RM430,000.00. The property was subsequently registered in the second defendant’s name upon full payment of the purchase price. 5

In January 2020, the plaintiffs instituted this action against the three defendants. It is the plaintiffs case that the first defendant had given an assurance/guarantee that the property will not be auctioned off if the arrears was settled at least 7 days before the auction. It is pleaded that the first defendant had reneged on its promise by refusing to accept payment by the first plaintiff. It is said that in consequence of the first defendant’s breach, the public auction and the sale of the property are invalid and must be set aside and the plaintiffs be reinstated as the registered proprietors of the property. In the alternative, the plaintiffs claim RM40,000.00 as damages for the loss suffered as a result of being unable to sell the property to the second defendant for RM470,000.00.

On 3 September 2020, the first defendant filed the present application to strike out the action. Parties’ submissions Case for the defendants 12. The first defendant contends that the plaintiffs auction is unsustainable as the only way the auction and sale can be challenged is by way of the appeal procedure laid down in section 418 of the National Land Code.

The first defendant also contends that the action is frivolous and vexatious as it was legally entitled to proceed with the auction as the plaintiffs had failed to settle the arrears at least 7 days before the auction. The first defendant also argues that the auction could have been postponed or cancelled if the plaintiffs had 6 approached the land administrator or its solicitor on the date of the auction and given them proof of their attempt to make payment of the arrears on the 17 May

The first defendant submits that by not doing so, the plaintiffs are precluded from challenging the auction and sale of the property to the second defendant. Case for the plaintiffs 14. In response, the plaintiffs contend that the action should not be struck out as they should be given the opportunity to prove that despite an assurance and/or guarantee by the first defendant that the property will not be auctioned off if the plaintiffs settled the arrears at least 7 days before the auction date, they were prevented by the latter from making the payment as supported by exhibit IK2.

The plaintiffs submit that the first defendant was in breach of this assurance when it refused to accept payment on 17 May 2017. By reason of this breach, they are entitled to seek a declaration that the auction and sale conducted on 25 May 2017 is invalid. The law on striking out 16. Order 18 Rule 19 (1) of the ROC provides, inter-alia, that the court may at any stage of the proceedings order to be struck out any pleading on the grounds that:

it discloses no reasonable cause of action or defence; or

it is scandalous, frivolous or vexatious; or 7

it may prejudice, embarrass or delay the fair trial of the action; or

it is an abuse of the process of the Court.

The law applicable in a striking out can be found in these well known and often quoted cases like Bandar Builder Sdn Bhd & Ors v United Malayan Banking Corporation Bhd [1993] 3 MLJ 36 [SC] and Raja Zainal Abidin Bin Raja Haji Tachik & Ors V British-American Life & General Insurance Bhd [1993] 3 MLJ 16 [SC]. It was been held that the power of striking out will only be exercised in plain and obvious cases and that when deciding a striking out application, the court must consider whether the action is “plainly and obviously unsustainable” or whether there are other reasons relating to the abuse of process and impossibility of a fair trial that justify striking out the action. Was the first defendant in breach of assurance/guanteee given 18. It is not in dispute that the first defendant informed the plaintiffs that the property will not be auctioned off if the arrears was settled at least 7 days before the auction. The plaintiffs case is premised on the allegation the first defendant was in breach of the assurance when it refused to accept payment of the arrears on 17 May 2017. The first defendant denies it is in breach of the said assurance.

Having regard to the incontrovertible fact that the first plaintiff had gone to the bank on 17 May 2017, as evidenced by the RHB bank slip IK2 for a sum of 8 RM14,400.00, the first defendant’s contention that the auction was proceeded with as the arrears had not been settled is credibly disputed.

It is trite that before a court strikes out a claim on the ground that is frivolous and vexations it must satisfy itself that the claim is obviously unsustainable or bound to fail or is an abuse of the process of court. In light of the bank slip, I am not persuaded that the plaintiffs action which is founded on the allegation that the auction was proceeded in breach of an assurance made to the plaintiff is unsustainable. Whether plaintiffs entitled to set aside auction by way of declaration 21. The next issue has to do with whether the plaintiffs are entitled to seek a declaration for the auction and sale to be declared void and set aside in the event the first issue is decided in their favour.

In this regard, I refer to section 418 of the NLC. It provides: “418. (1) Any person or body aggrieved by any decision under this Act of the State Director, the Registrar or any Land Administrator may, at any time within the period of three months beginning with the date on which it was communicated to him, appeal therefrom to the Court. 9

Any such appeal shall be made in accordance with the provisions of any written law for the time being in force relating to civil procedure; and the Court shall make such order thereon as it considers just.

In this section “decision” includes any act, omission, refusal, direction or order.”

In Loh Seng Lee v Yunley Enterprise Sdn Bhd and another appeal [2009] 2 MLJ 242; [2009] 3 CLJ 486 the Court of Appeal had the opportunity to consider section 418. There, the respondent was granted banking facilities by the bank secured by charge of two pieces of land. The respondent defaulted in the payment. The bank commenced an action against the respondent and the guarantors and simultaneously applied and obtained an order of sale of the charged lands from the land administrator. The lands were sold to the appellant/successful bidder. The respondent subsequently filed an originating summons for a declaration that the auction as well as the sale of the lands to the appellant was null and void ab initio. The respondent argued, inter alia, that the lands were wrongfully sold together in the same auction and that the application under Form 16G of the National Land Code was defective. The judge concluded that as both lands were sold collectively, the sale was in breach of s 263(3) of the NLC, and hence invalid and void granted the declaration sought and further ordered the appellant to transfer the lands back to the respondent. 10

On appeal, Suriyadi JCA in delivering the judgment of the Court observed: “As stated above we had allowed the appeal. We were of the view that a decision or direction by the land administrator to auction the two pieces of land together was a 'decision' within the definition of s 418(3) of the NLC. On the proper reading of s 418(1) of the NLC, the correct course of action for the respondent to take was to file an appeal, of which it had failed to undertake, instead of taking the circuitous route.”

This case illustrates that the High Court's jurisdiction to set aside an auction and sale ordered by the land administrator is clearly provided by section 418 of the Act. The jurisdiction is appellate and not original. Thus, if the plaintiffs were dissatisfied with the validity of the auction in this case, they should have filed an appeal under section 418 instead of bringing this action seeking a declaration for the auction and sale to be set aside. See also Lee Gee Pheng v RHB Bank Bhd [2003] 4

In my view, this is a plain and obvious case where the summary procedure provided under Order 18 Rule 19 should be invoked only to strike out the prayer in the claim for a declaration that the auction and sale was invalid and void and ought to be set aside. 11

The plaintiffs are entitled to proceed with the alternative claim for damages for breach of the assurance given to them. The key issue here is whether the plaintiffs’ claim for breach should be struck out as being unsustainable, frivolous and vexatious. It is trite law that however weak a plaintiff’s case may appear, he is entitled to his day in court and should not be shut out before he has presented his evidence. He can be ordered to pay costs for any misplaced confidence in the strength of his case. Conclusion 28. In the circumstances, I allow only the striking out of the prayer (a) in the statement of claim for a declaration that the auction and sale was void and be set aside. Dated : 21 September 2021 (S.M KOMATHY SUPPIAH) Judge High Court of Malaya Shah Alam Date of Decision : 5 August 2021 Solicitors :- For the Plaintiffs: Kevindran a/l Aurasu, [Messrs Kevindran & Co.] 12 For the First Defendant: Farhani Fariyanti binti Abd Ghapar, [Messrs Zahrin Emrad & Sujaihah] For the Third Defendant: Husna binti Abdul Halim, [Penolong Penasihat Undang-Undang Negeri Selangor, Kamar Penasihat Undang-Undang Negeri Selangor]