1. Thye Seng & Company Sdn. Bhd. v 1. Universal Trustee (Malaysia) Berhad (BA-24NCVC-102-04/2016)

THYE SENG & COMPANY SDN BHD (Company No. 3368-T)

NIRWANA JUARA SDN BHD (Company No. 349883-A)

SIAN AID CREDIT DEVELOPMENT SDN BHD (Company No. 43375-V)

UNI-FORTUNE SDN BHD (Company No. 172358-U) 2

LANYANG INDUSTRIALS SDN BHD (Company No. 12646-A) … PLAINTIFFS

UNIVERSAL TRUSTEE (MALAYSIA) BERHAD (Company No. 17540-D)

GULA PERAK BERHAD (IN LIQUIDATION) (Company No. 8104-X)

CIMB BANK BERHAD (Company No. 13491-P) … DEFENDANTS GROUNDS OF JUDGMENT (Enclosure 1) A. PRELIMINARY [1] The present Originating Summons is yet another addition to the many series of intervention and challenge by parties in relation to the Gula Perak turmoil. [2] Before this Court, all the Plaintiffs ( i.Thye Seng & Company Sdn Bhd, ii. Nirwana Juara Sdn Bhd, iii Sian Aid Credit Development Sdn Bhd & iv, Uni-Fortune Sdn Bhd - “Plaintiffs”) are third parties who, after for so long in time sat on their supposed rights, now suddenly have a change of hearts when the same rights ignored ran the risk of being defeated. 3 [3] The Plaintiffs, by their Originating Summons (Enclosure 1) dated 29.4. 2016 sought from this Court the following orders:

Satu deklarasi bahawa Defendan Pertama tidak mempunyai apa-apa kepentingan terhadap lot-lot industri yang berikut yang dimiliki oleh Plaintif-Plaintif:-

Lot 237, Lot 223 dan Lot 264 yang dimiliki oleh Plaintif

(ii) Lot 253 dan Lot 254 yang dimiliki oleh Plaintif Ke-2;

(iii) Lot 255 ke Lot 262 yang dimiliki oleh Plaintif Ke-3;

(iv) Lot 277 ke Lot 281 yang dimiliki oleh Plaintif Ke-4; dan

Lot 282 ke Lot 288 yang dimiliki oleh Plaintif Ke-5. (secara kolektifnya dirujuk sebagai “25 Unit tersebut”)

Satu deklarasi bahawa Defendan Pertama telah melanggar dan/atau memungkiri akujanji yang telah diberikan olehnya melalui surat bertarikh 25.8.2004 bahawa Defendan Pertama sama sekali tidak mempunyai apa-apa kepentingan terhadap 25 Unit tersebut dan tidak akan memasukkan 25 Unit tersebut dalam sekiranya prosiding perampasan tanah dimulakan terhadap Lot 24 dan Lot 458 (“Penolakan dan Akujanji”);

Satu deklarasi bahawa Defendan Pertama tidak berhak untuk melelongkan Lot 23 dan Lot 458 dan/atau menguatkuasakan satu 4 gadaian melalui Perserahan No.: 18153/2003 yang telah didaftarkan pada 2.4.2003 (“Gadaian”) tanpa mengemukakan Penolakan dan Akujanji dan/atau mengecualikan 25 Unit tersebut daripada tindakan gadaian;

Satu deklarasi bahawa Gadaian dan/atau mana-mana kepentingan dan hak-hak yang diberikan kepada Defendan Pertama berdasarkan Gadaian bukan tidak boleh disangkal di dalam maksud Seksyen 340(2) Kanun Tanah Negara 1965;

Satu deklarasi bahawa Gadaian tersebut adalah oleh itu, cacat, terbatal dan/atau tidak sah;

Kos permohonan ini akan ditanggung oleh Defendan Pertama; dan

Apa-apa relif selanjutnya atau lain yang dianggap sesuai dan wajar oleh Mahkamah yang mulia ini untuk diberikan. [4] The Defendants in this Originating Summons are namely; i. Universal Trustee (Malaysia) Berhad - the 1st Defendant, ii. Gula Perak Berhad (In Liquidation) - the 2nd Defendant and iii. CIMB Bank Berhad - the 3rd Defendant. 5 [5] It is to be noted that pending the hearing and disposal of their Enclosure 1, the Plaintiffs had also filed an interlocutory application in Enclosure 4, applying for an interim injunction to restrain the 1st Defendant from proceeding with its foreclosure proceedings namely to injunct the 1st Defendant from conducting the auction. [6] However, when Enclosure 4 was called for hearing on 20.6.2016, the parties had informed this Court that the 1st Defendant had given an undertaking not to file any Summons for Direction in respect of the two lots until the disposal of Enclosure 1. Thus, on the premise of the 1st Defendant’s undertaking, the Plaintiffs had then withdrew its Enclosure 4. [7] On the same date, the Plaintiffs had also withdrawn its claim against the 3rd Defendant (CIMB Bank Berhad). Accordingly, this Court had made these orders: i. that the Plaintiffs’ Enclosure 4 is struck out and the costs of striking out Enclosure 4 with costs being costs in the cause. ii that the Plaintiffs’ claim against the 3rd Defendant be struck out with no order as to costs. [8] Now, what remains before this Court is the Plaintiffs’ action against the 1st and 2nd Defendants. 6 B. BACKGROUND FACTS [9] The facts is simply that the 2nd Defendant debtor {Gula Perak Berhad (In Liquidation)} defaulting on facilities granted by the 1st Defendant Universal Trustee (Malaysia) Berhad - the creditor) which are secured by the 2nd Defendant’s properties, now faces a myriad of foreclosure actions on all of the securities furnished by the 2nd Defendant. [10] The security relevant to the present case is a charge which was created at least 12 years before the foreclosure was commenced. And after all these long years, the Plaintiffs had never challenge the validity of the charge. But now, i.e 12 years later the Plaintiffs plead to this Court that the charge ought to be deemed invalid for want of rights or interests. The Plaintiffs’ case here is an utterly desperate attempts to mould whatever law within convenience and bend the law to fit the Plaintiffs’ case with blatant disregard of time-celebrated principles in law and flagrant ignorance to the Plaintiffs’ own acts which are self-defeating their own rights. [11] The 2nd Defendant (“GPB”) is the debtor in liquidation. The 1st Defendant (“UTB”) is the creditor exercising its rights to foreclose 7 the securities charged by GPB which is inclusive of Geran 29953, Lot 24, Mukim Batang Berjuntai, Daerah Kuala Selangor, Negeri Selangor Darul Ehsan (“Lot 24”) as well as Geran 32993 Lot 458, Mukim Batang Berjuntai, Daerah Kuala Selangor, Negeri Selangor Darul Ehsan (“Lot 458”) (collectively referred to as “the Lots”) [12] The Lots were charged to UTB under Presentation No. 18153/20013 registered in 2.4.2003 (“Charge”) to secure facilities of Redeemable Convertible Secured Notes for the benefit of GPB. The factum of default by GPB is undisputed and as at 22.4.2008, GPB owed a whopping sum of RM324,472,214.14. Hence, UTB acting well within its rights as a chargee sought to enforce the charge to recover the amounts failed to be repaid by the debtor GPB. [13] 12 years have passed since the inception of the Charge and at least 6 years after the declaration of default, UTB has successfully obtained an Order for Sale on 17.3.2014 and has since applied for a Summons for Direction without any intervention of third parties claiming interests for the Lots. Upon the Summons for Direction, the Lots were set for auction to be sold separately on 29.9.2015. However, other third parties namely Chai Kim Fah, Precitrade (M) 8 Sdn Bhd and Mirage Point (M) Sdn Bhd have applied to intervene and challenge the foreclosure. However it is pertinent to note here that the intervention has since been held by the High Court to be wrongful and that these third parties have no rights to intervene. The appeal against this decision was later withdrawn by the third parties. [14] Upon filing for fresh Summons for Direction, Lot 24 was set to be auctioned off on 5.5.2016, while Lot 458 was set for auction on 21.6.2016. Again, in an unremarkable attempt to challenge the auction, the Plaintiffs in the present case right at the last minute just 2 days before the auction of Lot 24, filed a Notice of Application to injunct UTB from conducting the auction. [15] The basis of the injunction was that allegedly, the Lots have been agreed by GPB to be sold off to the Plaintiffs and that the Plaintiffs are bona fide purchasers for value of the Lots. The Plaintiffs staked their claim in reliance of a supposed Letter of Disclaimer (“Disclaimer”) by the previous chargee of the Lots, Aseam Bankers Malaysia Berhad (“AMB”) dated 15.9.1999 (in which AMB had disclaimed the Lots from the charge) as well as Sale and Purchase Agreement (“SPAs”) between GPB and the Plaintiffs. 9 [16] This Disclaimer is the core essence of the Plaintiffs’ case. It is on this Disclaimer that the Plaintiffs contend that: a. UTB has no indefeasible rights over the Lots b. UTB has wrongfully/negligently agreed to the charge without excluding the Lots c. UTB has misrepresented or fraudulently misrepresented the facts to the Court in concealing the alleged Disclaimer and purchase of the Lots in UTB’s application for OFS as well as SFD. d. UTB has obtained the OFS vide void/insufficient instrument and thus, in breach of the law. C. WHETHER UTB HAS INDEFEASIBLE RIGHTS AS CHARGEE [17] This Court makes no hesitation to find that the charge to UTB is a valid and enforceable charge notwithstanding the sale to the Plaintiffs as well as the Disclaimer by AMB. And this finding is grounded on a plethora of reasons, clearly justifying the existence of UTB’s rights as chargee and the validity of the Charge. 10 Whether Plaintiffs’ rights as alleged bona fide purchaser supersede UTB’s registered rights and indefeasible interest as registered chargee of the Lots [18] From the outset, just the mere clash of the Plaintiffs’ rights with UTB is sufficiently telling that the Plaintiffs have no recourse to challenge UTB’s right in rem registered in the titles of the Lots. In essence, it is unnecessary for this Court to go deep into the substance since the Plaintiffs’ case would ultimately fail to overcome this preliminary hurdle. [19] It is a trite and time-celebrated principle in law that the rights of a bona fide purchaser for value cannot supersede the indefeasible rights of a chargee unless there is proof of a scheme or collusion between the chargee and chargor to defeat the interest of the bona fide purchaser for value. And the Federal Court in the case of James Edward Buxton & Anor v Supreme Finance (M) Bhd [1992] 1 CLJ (Rep) 129 had gone as far to decide that the indefeasible rights of the chargee remains untouched even if the chargor’s conduct was plainly unconscionable or deceitful. 11 [20] And this is exactly the facts in the present case. It is clear from the Plaintiffs’ cause papers that the Plaintiffs never averred any allegation or facts forming any evidence of collusion or scheme. In fact not even a single spec of evidence was exhibited to this Court to prove that UTB knew of the sale and disclaimer at the time the Charge was created or at the time the OFS and SFD was applied for. All that was afforded was plain conjectures and barren assumptions. [21] The Federal Court in the case above had held that: “The issue as to the rights of an innocent purchaser for value, with or without notice of the charge as against a registered chargee has been considered by the Courts and is now settled law. … ... the interest of a registered chargee is indefeasible by s. 340(1) of the Code unless it is made defeasible by s. 340(2) 12 The indefeasibility of the chargee's interest is not affected by the chargor's conduct, however unconscionable or deceitful it may be, unless it can be shown that there was collusion between the Chargor and the chargee to defeat the interest of a third party. The interest of a bona fide purchaser for value cannot prevail over that of a registered chargee.” [22] Thus, the Plaintiffs’ case falls flat just against this general principle that the Plaintiffs’ rights (as bona fide purchaser for value) does not trump over UTB’s rights as registered chargees especially considering the total absence of any averments of any fact or contention of any collusion, scheme, or conspiracy between UTB and GPB. Whether there is fraud or misrepresentation by UTB in its application for OFS and SFD as well as the creation of the Charge [23] It is astounding to note that the Plaintiffs in their most tenuous contention to prove misrepresentation have utterly failed to exhibit even a single evidence to corroborate its averments. It is incredibly perplexing that the Plaintiffs would outright contend of such 13 malicious conduct without any evidence to prove so. All that the Plaintiffs have furnished are the Disclaimer and the SPA of the Lots between GPB and the Plaintiffs. There is no proof at all of any communication between UTB and GPB regarding the Disclaimer and SPA. There is no proof at all that GPB had informed UTB of the Disclaimer and the SPA. There is a total absence of any proof that UTB has any knowledge of the sale and Disclaimer at the time the Charge was created and at the time the OFS and SFD were applied for. [24] If there is any misrepresentation or fraud here, it is GPB’s own failure to inform, or deceit in concealing the fact of the sale and Disclaimer from UTB. And it is reiterated here that the chargor’s deceit however unconscionable does not affect or defeat the indefeasible rights of a registered chargee. [25] Not only that, the Plaintiffs themselves have failed to take reasonable steps to make their interest in the Lots known to the world. The Plaintiffs sat on their rights and failed to put any notice in the form of caveats on the titles to the Lots of their alleged interests. Thus, even if the Defendant were to take reasonable steps to ascertain the status of the Lots in making the proper 14 searches, the Disclaimer as well as the sale would still not be discovered or realised by UTB. [26] Accordingly, it is not incumbent upon UTB to go so deep beyond the titles to ascertain third party interests that may lie beyond the titles. The Plaintiffs’ rights were not affixed in the register. And it is sufficient for UTB to satisfy itself on the legitimacy of the creation of the Charge by looking at the title. Thus, upon UTB’s satisfaction, the Plaintiffs cannot now fault UTB for going against the same rights that the Plaintiffs themselves did not even bother to safeguard. [27] Valuable guidance can be found in the case of Lai Soon Cheong v Kien Loong Housing Development Sdn Bhd & Anor [1993] 2 CLJ 199 where the Court had held the following: “I am not aware of any law which provides that before a chargee can accept a charge on lands…the said chargee must ensure that no sale of the subdivided lots has yet been carried out or that no sale and purchase agreement has been executed by the chargor” 15 [28] Echoing the same sentiment is the Federal Court’s decision in Borneo Housing Mortgage Finance Berhad v Time Engineering Berhad [1996] 2 CLJ 561: “We should add, that in law, there is no requirement that prior to the creation of a charge over land…, a charge is under an obligation to ascertain that the lots have been sold or that they are not subject of sale and purchase agreements executed by a chargor as vendor” [29] The same principle has been recently reiterated in the case of Leong @ Chan Soon Guan v Danaharta Urus Sdn Bhd & Ors [2013] 1 LNS 1013 where the Court had held that: “… the law does not require the 3rd Defendant to go behind the "curtain" to make any enquiries as suggested by the Plaintiff to ascertain any subsisting third party interest on the Land. The Plaintiff is the architect of his own misfortune by his failure to lodge the caveat immediately after he had executed the SPAs. The Plaintiff ought to have lodged caveats on the Master Title and subsequently on the individual Document of 16 Titles at the earliest opportune time to protect his interest. After all, the Plaintiff was represented by solicitors at all times during the SPA transaction. It is now too late in the day to blame the 3rd Defendant for the predicament that he finds himself in.” [30] UTB relied on the representation of GPB. And this reliance is made clear in the Charge annexure that GPB as chargor shoulders the duty of full disclosure and representation under Clause 21.01

of the Annexure. And GPB never mentioned anything about the sale or the Disclaimer to UTB. There were no evidence at all to indicate that even the slightest notice of the sale or Disclaimer ever been given by GPB to UTB. And again, it was not incumbent upon UTB to find out what was not reasonable for the Defendant to find out. How could the UTB be expected to be aware of something he was not a party or privy to? [31] The Disclaimer was issued some 15 years ago (in 1999) before the foreclosure action, and was never in the business of the Defendant to know or be aware of it. Even if UTB exerted extreme efforts to ensure the legitimacy of the creation of the Charge, UTB would not have known of the Disclaimer or the sale as the 17 Disclaimer and the sale were only within the private knowledge of GPB and the Plaintiffs. It is utterly preposterous to expect UTB to realize or find something, when the Defendant does not even reasonably know what to look for. [32] Thus, it is apparent herein that the Plaintiffs have utterly failed to prove any of the vitiating factors to indefeasibility under Section 340(2) of the National Land Code. There was no proven fraud or misrepresentation. [33] It is also opportune at this juncture to address the Plaintiffs’ total failure of lodging caveats. Although in general, the failure to lodge caveat would not necessarily affect the rights of a bona fide purchaser for value, however, the general principle would pave way to different rules and exception when placed against the backdrop of certain facts of a case. And in the present case, the facts is that the rights of the Plaintiffs in personam in the sale with GPB clashes with the rights in rem of UTB, as registered chargee of the Lots. In such specific facts that the interest of a bona fide purchaser for value is put against the rights of a registered chargee, it is already settled law that the rights of the bona fide purchaser for value does not defeat the rights of a registered 18 chargee (see James Edward Buxton & Anor v Supreme Finance (M) Bhd [1992] 1 CLJ (Rep) 129). It is also already settled law in the foregoing circumstances that the bona fide purchaser’s failure to lodge caveats is the purchaser’s own self-inflicted predicament and thus, it is far too late in time for the Plaintiffs to blame UTB as registered chargees for ignoring or overlooking the Plaintiffs’ alleged rights upon the Lots. The Plaintiffs sat on their rights and never bothered to register their rights to be reflected on the titles. They never lodged caveats even. Thus, when UTB satisfies itself from the titles that there were no 3rd party interests attached to the Lots, then the Plaintiffs cannot fault UTB for going against the same rights the Plainttiffs sat on and ignored (see Leong @ Chan Soon Guan v Danaharta Urus Sdn Bhd & Ors [2013] 1 LNS 1013) [34] Thus, upon the foregoing deliberation, it is this Court’s finding that the Charge remains a valid charge and indeed UTB reserves indefeasible rights over the lots as lawful registered chargee of the Lots. Whether there are void instruments or breach of any statutory provision 19 [35] Somehow, upon picking issues and provisions which were not averred to or were never the Plaintiffs’ basis of their case, the Plaintiffs contend that since the Charge was void, then the creation of the Charge as well as the granting of the OFS as well as SFD were brought forth vide void or insufficient instrument and breach of statutory provision. [36] The Plaintiffs’ case goes along the line of arguing that the instruments used to obtain the OFS and SFD such as Form 16 of the National Land Code, are void instruments as it has included the Lots which were disclaimed and supposedly should not be put under the OFS. However, this Court finds no credence to this contention as it has already been found earlier that UTB indeed has indefeasible rights as chargee over the Lots and has acted well within their rights to enforce the valid Charge. [37] Not only that, it is perplexing that over the years the Plaintiffs have never challenged the validity of the Charge and only began to challenge the same about 11 years after the Charge was created. The learned counsel for the UTB has afforded an explanation which is more probable than not to be true. It is interesting to note 20 that the terms of the sale between GPB and the Plaintiffs have express stipulation of GPB’s rights to put the Lots as security during the continuance of the SPAs. The SPAs includes the following term: “The Vendor (GPB in the present case) shall be entitled during the continuance of the provisions of this Agreement to charge or encumber the said Property to any bank, financial institution or corporation… for purposes of securing any credit facilities…” [38] The Plaintiffs in entering into the SPAs admit, agree, and even acknowledge the validity of a charge created over the Lots even during the continuance of the SPAs. GPB’s act in charging the Lots to UTB is an act well within the line of the SPAs. Thus, this Court cannot allow the Plaintiffs to go against their own promise and status quo. [39] Valuable guidance can be drawn from the decision of the Court of Appeal in the case of Cheah Theam Kheang v City Centre Sdn Bhd & Other Appeals (2012) 2 CLJ 16 which had held that: 21 “In other words of Sir Nicolas Browne-Wilkinson VC in Express Newspapers Plc v News (UK) Ltd and Others (1990) 3 All ER 376 at pp. 383 to 384: There is a principle of law of general application that it is not possible to approbate and reprobate. That means you are not allowed to blow hot and cold in the attitude that you adopt. A man cannot adopt two inconsistent attitude towards another : he must elect between them and, having elected to adopt one stance, cannot thereafter be permitted to go back and adopt an inconsistent stance.” [40] This Court also refers to the decision of the Federal Court in the case of Boustead Trading (1985) Sdn Bhd v Arab Malaysian Merchant Bank Bhd [1995] 3 MLJ 331 where the Federal Court referred to Lord Denning’s decision in the case of Amalgamated Investment which reads: “The width of the doctrine has been summed up by Lord Denning in the Amalgamated Investment case (at p 122) as follows: 22 The doctrine of estoppel is one of the most flexible and useful in the armoury of the law. But it has become overloaded with case. That is why I have not gone through them all in this judgment. It has evolved during the last 150 years in a sequence of separate developments: proprietary estoppel, estoppel by representation of fact, estoppel by acquiescence, and promissory estoppel. At the same time, it has been sought to be limited by a series of maxims: estoppel is only a rule of evidence, estoppel cannot give rise to a cause of action, estoppel cannot do away with the need for consideration, and so forth. All these can now be seen to merge into one general principle shorn of limitations. When the parties to a transaction proceed on the basis of an underlying assumption either of fact or of law – whether due to misrepresentation or mistake makes no difference – on which they have conducted the dealings between them – neither of them will be allowed to go back on the assumption when it would be unfair or unjust to allow him to do so.” 23 [41] Thus, it is this Court’s finding that there is no such void or insufficient instrument to render UTB’s rights defeasible under Section 340(2) of the National Land Code. [42] As against the Plaintiffs’ fallible contention on a supposed statutory breach under Sections 241(3) and 301 of the National Land Code, this Court is inclined to agree with the learned counsel for UTB that the Plaintiffs are ultimately unclear on what statutory provision that the Charge, OFS or SFD had breached. To this Court’s best understanding, the Plaintiffs’ contention here is a continuation to their contention on the use of void or insufficient instrument due to the alleged absence of interest of UTB to remain as chargee over the Lots. It is the Plaintiffs’ contention consequent to the use of alleged void instruments that the OFS and SFD was applied and granted in contradiction of statutory provision of the National Land Code. However, it is reiterated here that this Court has already found that there is no absence of interest or defeasibility of UTB’s rights over the Lots, and that there is no such void or insufficient instruments. Therefore, this Court finds that the Charge, the OFS as well as the SFD are not in any breach of any law or statutory provision. 24 Whether Negligence is a ground to challenge the validity of the Charge and whether UTB was negligent [43] As rightfully pointed out by the learned counsel for UTB, mere negligence firstly, does not constitute a fraud. (see Borneo Housing; Lian Keow Sdn Bhd (In Liquidation) & Anor v Oversease Credit Finance (M) Sdn Bhd & Ors -1988] 2 MLJ 449) [44] Furthermore, mere negligence does not defeat the registered interest of a chargee. Similar facts was discussed by the Court in the case of Zainal Abidin Mohamed v ROslan Abdul Aziz & Anor [2003] 7 CLJ where the plaintiff there contended that the chargee was negligent in accepting a charge as security for loan facilities without prior inspection if there were any encumbrances on the property. The Court there then held that: “The court is of the view that the NLC is a comprehensive code, and the indefeasibility of title or interest can only be attacked to the extent permitted by the NLC. If a party fails to bring his claim within the statutory exceptions, he cannot impeach the indefeasibility of a registered interest. The 25 plaintiff has not cited any authority to support the contention that a duly registered charge can be set aside simply on the basis of the chargee's negligence.” … … and the court holds that negligence in or of itself is not a ground for setting aside a charge.” [45] And even assuming that this Court accepts that negligence may affect the Charge’s validity (which this Court does not), there are no evidence to indicate that UTB was at all negligent. This Court reiterates the finding above and on the principle upheld in the cases of Lai Soon Cheong v Kien Loong Housing Development Sdn Bhd & Anor [1993] 2 CLJ 199, Leong @ Chan Soon Guan v Danaharta Urus Sdn Bhd & Ors [2013] 1 LNS 1013 and Borneo Housing Mortgage Finance Berhad v Time Engineering Berhad [1996] 2 CLJ 561 that UTB was never under any duty to ascertain if the Lots were sold off to any third parties before agreeing to the Charge. Not only that, since the Plaintiffs have never bothered to have their interest reflected in the title and failed to lodge caveats, it is clear that even if UTB went 26 the extra mile to conduct searches on the Lots, the Disclaimer and the sale would not have reached the knowledge of UTB. Thus, it is this Court’s further finding that negligence is not a ground to challenge the Charge. This Court also finds that the Plaintiffs have utterly failed to prove any negligence on the part of UTB. [46] Thus, on all of the aforementioned deliberation, it is this Court’s finding that UTB reserves indefeasible rights over the land and that UTB has acted well within the rights as chargee to foreclose the Lots. It is also this Court’s finding that the Disclaimer and the sale have no bearing at all against UTB’s indefeasible rights as registered chargee. It is also this Court’s finding that the Charge remains as a valid enforceable charge. D. WHETHER UTB’s OWN DISCLAIMER DEFEATS UTB’s INDEFEASIBLE RIGHTS AS CHARGEE [47] As a show of good faith and prudence, upon having knowledge of the alleged Disclaimer and sale, UTB has issued its own Letter of Disclaimer (“UTB Disclaimer”) alongside other numerous acts which shows UTB’s utter good faith in applying for the OFS and 27 SFD. It is on this Letter of UTB Disclaimer, the Plaintiffs also contend that the Charge was invalid. [48] However, it has already been previously decided that even when the chargee itself (and not the third party purchasers) applies to set aside an OFS and auction of land due to similar existence of letters disclaiming interest on properties (in view of purchases by third parties), the mistake of including the said properties disclaimed cannot defeat the indefeasible rights of the chargee over the properties although the chargee itself is ready to abandon its indefeasible rights. It was very recently decided by the Court of Appeal in the case of Rohaya Ali Haidar v Ambank (M) Bhd [2016] 4 CLJ 563 that: “We find that the respondent having made a mistake in not addressing the interest of this earlier purchasers and the letters of disclaimers that the respondent has issued cannot now come to court to set aside the order for sale so as to protect their own shortcomings. These purchasers rights (if any) are against the respondent (if at all) based on the letters of disclaimers that the respondent has issued. That certainly cannot constitute a basis to 28 defeat the registered interest of the appellant under s. 340(1) of the NLC. [49] Although the Court of Appeal case above slightly differs in facts in that the OFS there had reached the stage that the properties have been auctioned off to new buyers, the difference does not detract from the principle that the interest of the registered chargee remains indefeasible against earlier third party purchasers even when the chargee sought to absolve its own indefeasible rights unless there are any evidence of collusion, or scheme of fraud between the chargor and chargee to defeat the third party purchaser’s rights. A simple mistake, oversight, or even negligence does not necessarily fall within the exceptions under Section 340

of the National Land Code to defeat the indefeasible rights of a chargee under Section 340(1) of the National Land Code particularly when the mistake, oversight or negligence, pertains to the indefeasible rights of a chargee (which ultimately will prevail against the interest of bona fide third party purchasers for value). [50] Especially in the present case, the inclusion of the Lots is based on the enforcement of the Charge by UTB as chargee (although against the rights of the Plaintiffs as alleged bona fide purchaser 29 for value). The Law affords such protection for chargees unless it can be proven that the chargee colluded with the chargor to deprive the rights of the third party bona fide purchasers. Especially in the present case, UTB relies on GPB’s sole responsibility for full disclosure and representation on the state of the Lots. Such mistake, oversight or negligence does not invalidate the Charge. And since the Charge remains a valid charge, UTB reserves all the rights to enforce the Charge and foreclose the Lots. Following UTB’s rights to enforce the Charge on the Lots, the instruments leading to the foreclosure of the Lots also remain valid and sufficient as they remain within the rights of UTB to include the Lots in the instruments leading to the foreclosure. E. COURT’S DECISION [51] In view of all of the findings and deliberations above, it is this Court’s decision that the Plaintiffs have utterly failed to prove their cases. [52] It is also this Court’s decision that if there is any recourse available for the Plaintiffs, it is an action in personam against GPB under the SPAs and not at all in rem against UTB’s registered chargee. (see 30 Bachan Sing v Mahinder Kaur & Ors [1956] 1 MLJ 97 ; Tan Shiang Hong v Tan Lee Choon & Anor [1985] 2 MLJ 369) [53] Thereto, this Court dismisses the Plaintiffs’ present Originating Summon. On the issue of costs [54] The parties had informed this Court that the costs of the application had been agreed by parties at RM20,000.00. Hence, this Court hereby orders that the Plaintiffs is to pay the 1st Defendant a sum of RM20,000.00 in costs. t.t. ...................................................... (DATUK AZIMAH BINTI OMAR) Judicial Commissioner High Court Shah Alam Selangor Darul Ehsan Dated the 25th October, 2016 31 For the Plaintiffs - Messrs Dee, Netto, Fatimah & Ng Alex Anton Netto For the First Defendant - Messrs Skrine & Co S. Ramesh P.Y. Kam For the Second Defendant - Messrs Adnan Sundra & Low Iris Tang