Malayan Banking Berhad v Dynasty Streams Sdn Bhd (WA-24FC-533-05/2019)

The Plaintiff has granted six (6) Loan/Overdraft facilities to the Defendant vide three (3) letters of offers dated 6th March 2007, 6th April 2007 and 6th August 2009 respectively.

The Facilities offered were secured by way of a charge over the Defendant’s properties as enlisted/described in the intitulment above.

As the Defendant defaulted in the payment and no remedial action was taken, the Plaintiff then filed a suit at the Kuala Lumpur High Court vide WA-22NCC-135-03/2019 on 20th March 2019.

Following that, on 29th March 2019, the Plaintiff through its Solicitors issued a Form D to the Defendant. On 14th May 2019 the Plaintiff filed an Originating Summons vide Enclosure (1.) for an Order for Sale. On 11th June 2019 Enclosure (1) was fixed for hearing. The Plaintiff’s Solicitor had informed the Court that the cause papers 3 have been served. But the Defendant was not present in Court. After hearing submission from the Plaintiff’s Solicitor, this Court had granted the application i.e. Order in Terms.

Vide Enclosure (11) filed by the Defendant dated 18th July 2019, the Defendant had tried to move this Court to set aside the said Order for Sale. Amongst the reason given was that the Defendant had received the cause papers only on 12th June 2019 i.e. 1 day after the hearing of Enclosure (1).

After hearing submissions by parties, this Court had disallowed the Defendant’s application with cost of RM5,000.00 to the Plaintiff.

Dissatisfied, the Defendant had filed an appeal to the Court of Appeal.

Herewith are the grounds for the decision.

On 6th March 2007, 6th April 2007 and 6th August 2009 the Plaintiff had issued several letters of offers to the Defendant to grant the following banking Facilities:

Overdraft 1 Facility (OD1) of RM1,000,000.00 (Account No. 508029-141817); 4

Overdraft 2 Facility (OD2) of RM1,000,000.00 (Account No. 508029-145109);

Term Loan Facility 1 (TL1) of RM5,000,000.00 (Account No. 408029-919982);

Term Loan Facility 2 (TL2) of RM700,000.00 (Account No. 408029-919999);

Term Loan Facility 3 (TL3) of RM1,000,000.00 (Account No. 408029-920009); and

Term Loan Facility 4 (TL4) of RM1,000,000.00 (Account No. 408029-920790). [10] The said Facilities were secured by way of a charge over the Defendant’s properties as described in the intitulment above (the “said Properties”). [11] Subsequently the Defendant faulted in its repayment. A Letter of Demand was hence issued by the Plaintiff’s Solicitors on 22nd February 2019. [12] As the Defendant did not take any actions to remedy the situation, hence on 20th March 2019, the Plaintiff commenced Kuala Lumpur High Court Civil Suit No. WA-22NCC-135-03/2019 (“Suit 135”). 5 [13] Following that, on 29th March 2019, the Plaintiff through its Solicitor issued a Form 16D to the Defendant. [14] On 14th May 2019, the Plaintiff filed Originating Summons (“Enclosure (1)”) for an Order for Sale of the Properties. For the purposes of Enclosure (1), the Plaintiff had affirmed two (2) Affidavits, namely:

the Affidavit in Support affirmed by Wan Rosmawati Wan Ibrahim on 14th May 2019 (“Enclosure (2)”); and

the Further Affidavit (Affidavit Lanjut) affirmed by Wan Rosmawati Wan Ibrahim on 3rd June 2019 (“Enclosure (3)”). [15] On 11th June 2019, Enclosure (1) was fixed for hearing and the Defendant was absent. After hearing submission from the Plaintiff’s Solicitor, an Order in Terms to Enclosure (1) was granted. [16] Vide Enclosure (11) dated 18th July 2019, the Defendant had filed an application to set aside the said Order. After hearing submissions by both parties, this Court dismissed the application with cost of RM5,000.00 to the Plaintiff. [17] Hence this appeal to the Court of Appeal. 6 C. THE DEFENDANT’S VERSION [18] The Defendant submitted that there was a breach of natural justice as the Defendant was not given the opportunity to be heard. They did not appear because they did not receive the cause papers. They only received them on 12th June 2019, one day after the Order (“Enclosure (1)”) was granted. Hence the Order for Sale was irregular for non-compliance of Order 83, Rule 2 (2) of the Rules of Court 2012 for not observing the (4) clear days rule. [19] Learned Counsel for the Defendant submitted that the Counsel for the Plaintiff on the hearing on 11th June 2019 had impressed upon the court that the service requirement had been fulfilled to warrant the granting of the said Order. [20] The Defendant’s Counsel further argued that Order 83, Rule 2 (2) Rules of Court 2012 should be relied on but instead reliance was placed on Order 10, Rule 3 (1) Rules of Court 2012 and para 19.10

of the main facility agreement by the Plaintiff. [21] Such being the case, the Order for Sale is irregular and should be set aside. [22] The Defendant also argued that the Order should be set aside as the Defendant had successfully proved that this was a cause to the contrary for the following reasons: 7

there was inconclusive proof as to the correct and/or exact amount owed to the Plaintiff;

third party rights will be affected by the said Order; and

the OS has been filed in abuse of the Court process. D. ANALYSIS AND FINDING OF THIS COURT [23] First thing first, this Court will address on technical/procedural issues first. [24] Perusing through the cause papers, this Court is satisfied that the Plaintiff has successfully served the Originating Summons and their Affidavit in Support together with letter dated 16th May 2019 on the Defendant by registered post on the following dates and address:

17th May 2019 addressed to the Defendant’s addresses at No. 39 Jalan Taman Star, Taman Wah Keong, 31400 Ipoh, Perak;

and/or No. 1, Jalan Dato’ Haji Megat Khas, Taman Bandaraya Utama, 31400 Ipoh, Perak;

and/or 24-3, Jalan 4/62D, Medan Putra Business Center, Bandar Manjalara Kepong, 52200 Kuala Lumpur pursuant to Order 10, Rule 3 (1) of the Rules of Court 2012 and paragraph 8

19.10 (a) of the Master Facility Agreement dated 16th April 2007 (for Overdraft Facility). [25] It is germane to note that paragraph 19.10 (a) of the Master Facility Agreement dated 16th April 2007 (for Overdraft Facility) provides as follows: “The service of any Legal Process may be personally delivered or given by prepaid registered or ordinary post sent to the Address for Services and such Legal Process shall be deemed to have been duly served after the expiration of five (5) days from the date it is posted and if delivered by hand, on the day it is delivered.” [26] In the Supreme Court case of Amanah Merchant Band Bhd v. Lim Tow Choon [1994] 1 MLJ 413 speaking through Mohamed Dzaiddin (SCJ) as he then was, the Court held: “Therefore, on the proper construction of Clause 17, since any notice may be served by sending the same through the post addressed to the last known address of the addressee, in our view, the deeming provision applies to the said notice, whether or not it is sent by AR registered post. Clause 17 does not provide that the notice should either be sent by registered post or AR registered post, and the fact that these words were omitted from cl 17 cannot justify the court reading those words in cl 17 as was done by the learned judge. In the context of cl 17 of the said guarantee, we are further of the view that it is not necessary that the appellant must 9 show that the AR card has been returned duly acknowledged to constitute effective service of the notice of demand. It is sufficient for the appellant to show that the notice was correctly addressed, pre-paid and delivered to the post office and acknowledged for service by the postal authority. Once these facts have been established, the deeming provision will inevitably apply. On the meaning of the words "Shall be deemed" in Clause 17, it would seem clear to us from the authorities that they mean "shall be regarded as".” [27] Order 10 Rule 3 Rules of Court 2012 which is exactly worded in the same manner as its predecessor, ROHC 1980 reads as follows: “Order 10 Rule 3:

3.

Where—

a contract contains a term to the effect that the Court shall have jurisdiction to hear and determine any action in respect of a contract or, apart from any such term, the Court has jurisdiction to hear and determine any such action; and

the contract provides that, in the event of any action in respect of the contract being begun, the 10 process by which it is begun may be served on the defendant, or on such other person on his behalf as may be specified in the contract, in such manner or at such place (whether within or out of the jurisdiction) as may be so specified, then, if an action in respect of the contract is begun in the Court and the writ by which it is begun is served in accordance with the contract, the writ shall, subject to paragraph (2), be deemed to have been duly served on the defendant.

A notice of a writ which is served out of the jurisdiction in accordance with a contract shall not be deemed to have been duly served on the defendant in accordance with paragraph (1) unless leave to serve such notice out of the jurisdiction has been granted under Order 11, rule 1 or 2.” [28] In the case of Ta Securities Bhd v. Ng Yen Ling [2001] 1 CLJ 102 referred by the Plaintiff, the Court referred to that provision and held: “[1] Order 10 r. 3(1)(b) of the Rules of the High Court 1980 provides, inter alia, that if the writ is served in accordance with the contract, "the writ shall be deemed to have been duly 11 served on the defendant". Thus, service is deemed contractually by the said clause and statutorily by O. 10 r. 3(1)(b) of the Rules of the High Court 1980. The writ in the instant case was sent by prepaid registered post to the proper address of the defendant and therefore, the deeming provisions of the said clause and of O. 10 r. 3(1)(b) of the Rules of the High Court 1980 came into operation. [2] The court was bound by the authorities to hold that the defendant in this case was precluded from showing that she did not receive the writ. The court had to take as conclusive that the writ was served on her.” [29] Working on those “formulae” above, as the Originating Summons and the Plaintiff’s Affidavit was posted on 17th May 2019, hence they shall be deemed to have been duly served on the Defendant after the expiration of five (5) days from the date it was posted i.e. on 22nd May 2019 (Wednesday). Until the hearing date on 11th June 2019 (Tuesday), the number of clear days were 11 altogether and this can be considered ample vis-a-vis the requirement of five (5) days (see the tabulation in the Plaintiff’s Submission). [30] It follows that Order 83 Rule 2 of the Rules of Court 2012 has been duly complied by the Plaintiff whereby the Originating Summons and the Plaintiff’s Affidavit in Support has been served on the 12 Defendant eleven (11) clear days before the hearing date on 11th June 2019. [31] For convenient sake, Order 83 Rule 2 of the Rules of Court 2012 are reproduced below: “Claims for delivery of possession or payments of moneys (O. 83, r. 2)

2.

Where in a charge action begun by originating summons, being an action in which the plaintiff is the chargee and claims delivery of possession or payments of moneys secured by the charge or both, the following provisions of this rule shall apply.

Not less than four clear days before the day fixed for the first hearing of the originating summons the plaintiff shall serve on the defendant the originating summons and a copy of the affidavit in support of the summons.

Where the plaintiff claims delivery of possession there shall be endorsed on the outside fold of the copy of the affidavit served on the defendant a notice informing the defendant that the plaintiff intends at the hearing to apply for an order to the defendant to deliver up to the plaintiff possession of the charged property and for such 13 other relief, if any, claimed by the originating summons as the plaintiff intends to apply for at the hearing.” [32] The Plaintiff in their written submissions had invited this Court to peruse Exhibit D of the Plaintiff’s Affidavit in Reply where it exhibited the tracking of the registered post at Track & Trace Pos Malaysia. Having perused the same, this Court was satisfied that the Defendant indeed has received the Originating Summons and the Plaintiff’s Affidavit in Support on following addresses and dates:

on 23rd May 2019 at the 24-3, Jalan 4/62D, Medan Putra Business Center, Bandar Manjalara Kepong, 52200 Kuala

on 24th May 2019 at the address of No. 39 Jalan Taman Star, Taman Wah Keong, 31400 Ipoh, Perak;

and/or No. 1, Jalan Dato’ Haji Megat Khas, Taman Bandaraya Utama, 31400 Ipoh, Perak. Therefore, until the hearing date on 11th June 2019 (Tuesday), the numbers of clear days were about 9 days. [33] This Court agreed with the Plaintiff that Order 83 Rule 2 of the Rules of Court 2012 is a provision for the purpose of service of the Originating Summons and the Plaintiff’s Affidavit in Support only (Originating Summons), and not for the service of the Plaintiff’s 14 Further Affidavit (Subsequent Affidavits). Regarding the Plaintiff’s Further Affidavit (Affidavit Lanjut) it will be governed by the contractual clause i.e. paragraph 19.10 (a) of the Master Facility Agreement dated 16th April 2002 that any legal process shall be deemed to have been duly served after the expiration of five (5) days from the date it is posted. In this case the Plaintiff’s Further Affidavit/Affidavit Lanjut here was posted on 3rd June 2019. Hence it is deemed served by contract on 9th June 2019 and it was still before the hearing date, 11th June 2019. [34] Notwithstanding the above reasoning, this Court opined that these are only procedures and technical in nature, which any breach of it will only give rise to procedural irregularly not nullify. Hence it is curable on terms under Rule 1 (3). The Court has a very wide discretion in sofar as exercising its power under this rule is concerned. The Rules of Court should be construed widely and generously to give effect to its manifest intention, thus every omission or mistake on procedure is to be regarded as an irregularity so long as it can do so without causing injustice. (See Harkness v. Bell’s Asbestos and Engineering Ltd [1967] 2 QB 729). [35] More so when such non-compliance does not occassion any injury and causes no injustice to the Defendant. [36] The basic principle is that the Court has a wide discretion to consider and decide whether a non-compliance with the Rules of 15 Court 2012 is pardonable or correctable example, without the need to strike out or set aside the Plaintiff’s Originating process as decided in the case of Karisma Saujana Sdn Bhd v. Alber a/l Antoni Tass [2008] 8 MLJ 693. In exercising its discretion, the Court will take into account whether the other party “has suffered prejudice” as a direct consequence of the irregularity. But the rule is so framed as to give the Court the widest possible power to do justice. [37] The Defendant’s contention was more on Enclosure (3) (Further Affidavit) which according to them, was served out of time. This Court had already made a finding on this matter. [38] The purpose of the Plaintiff’s Further Affidavit is just to prove the updated indebtedness of the Defendant as it stood at the hearing date on 11th June 2019. Hence, this Court opined that any irregularity on the service of the same is a mere irregularity and not nullity which can be cured under Order 2 Rule 1 (1) of ROC 2012 as amongst others, no injustice will be caused to the Defendant. [39] Further, this Court observed that at all relevant times, the Defendant has the full knowledge that the Plaintiff is in the process of foreclosing the Properties because the deponent of the Defendant’s Affidavit 1 & 2 i.e. Tan Boon Thien who is a director/shareholder of the Defendant company has admitted in his Defence dated 18th April 2019 filed at the High Court of Malaya in Kuala Lumpur civil action no. WA-22NCC-135-03/2019 that he has received a copy of 16 Form 16D on 1st April 2019. However, Tan Boon Thien has been quiet and did not give instructions to his former Solicitor, Messrs Paven & Co. to inform the Plaintiff’s Solicitors to accept service of cause papers on behalf of the Defendant/Chargor. [40] This Court also opined that for this, the Court cannot blame the Plaintiff for taking the position that the Defendant had willingly and negligently failed to appoint Solicitors until the Order for Sale was obtained on 11th June 2019. They reappointed Messrs Paven & Co. only thereafter. [41] In the Court of Appeal case of Malayan Banking Bhd v. Koay Kang Chuwan & Anor [2010] 5 MLJ 46, the Court of Appeal held that the omission to serve the First Respondent (Chargor) with the Affidavit of the Appellant’ Solicitors (Plaintiff’s Further Affidavit here) did not nullify the Order for Sale as that omission was an irregularity and not a nullity under Order 2 Rule 1 (1) of the Rules of High Court

The irregularity was curable. Further the total amount due was specified in the Order for Sale itself. There was thus no contravention of Section 257 (1) (c) of the National Land Code. The Order for Sale was properly issued. [42] Now the Court will venture into the merit of this case i.e. whether the Defendant has successfully raise “any cause to the contrary” to challenge the Plaintiff’s application for an Order for Sale. [43] Section 256 of the National Land Code read as follows. 17 “256. Application to Court for order for sale

This section applies to land held under:

Registry title;

The form of qualified title corresponding to Registry title; or

subsidiary title, and to the whole of any divided share in, or any lease of, any such land.

Any application for an order for sale under this Chapter by a charge of any such land or lease shall be made to the Court in accordance with the provisions in that behalf of any law for the time being in force relating ro civil procedure.

On any such application, the Court shall order the sale of the land or lease to which the charge relates unless it is satisfied of the existence of cause to the contrary.” 18 [44] It is pertinent to emphasise that this provision is mandatory. In the case of Keng Soon Finance Bhd v. MK Retnam Holdings Sdn Bhd & Anor [1989], the Privy Council held: “(2) Section 256 (3) of the National Land Code is mandatory. The Court ‘shall’ order a sale unless it is satisfied of the existence of ‘cause to the contrary’….” [45] It was further emphasised in the case of Ambank Bhd v. Chidambara Nathan MST Muthusamy & Anor [2014] 2 CLJ 161 where the Court of Appeal held: “The terms of s. 256 of the NLC are imperative. A court in the State of Malaya does not have a choice as to the type of order it may make when moved by a charge under s. 256. There is only one order that it is permitted to make, namely, an order for sale..”. [46] In the case of Low Lee Lian v. Bee Hin Lee Bank Bhd [1997] 1 MLJ 77, the Court only recognized 3 types of “cause to the contrary” as follows: “(i) Firstly, a chargor who is able to bring his case within any of the exceptions to the indefeasibility doctrine housed in Section 340 of the National Land Code;

(ii) Secondly, a chargor may show cause to the contrary within Section 256 (3) of the Code by demonstrating that the 19 chargee has failed to meet the conditions precedent for the making of an application for an order for sale. For example, failure on the part of the chargee to prove the making of a demand or service upon the chargor of a notice in Form 16D would constitute cause to the contrary. So too, where the notice demands sums not lawfully due from the charge;

(iii) Thirdly, a chargor may defeat an application for an order for sale by demonstrating that its grant would be contrary to some rule of law or equity.” [47] Regarding the amount owing under the Order for Sale being different from the amount in the Form 16D, at paragraph 7 of the Plaintiff’s Affidavit in Reply, the Plaintiff has explained that the same is because the further interest and as stated in the Plaintiff’s Further Affidavit which is pursuant to the contractual rights of the Plaintiff to tender a Statement of Account of the amount owing at the hearing of the Originating Summons. This is pursuant to Clause 9.15 of the Charger Annexure dated 16th April 2007 which provides that any statement issued by the Plaintiff’s officer relating to the Chargor/Defendant’s indebtedness is a conclusive proof against the Chargor/Defendant. (Page 169 of the Plaintiff’s Affidavit in Reply) [48] It is trite from the many lines of authorities, that any challenges on the calculation of interest are not “cause to the contrary”. In the Court of Appeal case of Jigarlal K Doshi v. Resolution Alliance Sdn Bhd & Another Appeal [2012] 1 LNS 811: 20 “(2) In a foreclosure action, claims of inter alia alleged breaches of contractual obligations or challenges on the calculation of interest under the loan agreement are not relevant. The Court will only be concerned with the restrictive categories of “cause to the contrary” as laid out in the case of Low Lee Lian. The alleged breaches separate civil suit” At para 26, the Court held: “It is not wrong for banks to claim for interest when it is their business to do so. Equity has no bearing in a case of foreclosure and thus it cannot be said by the Appellant that the Orders of Sale were contrary to “the rule of law and equity”.” [49] The Court has many times held that anything that does not fall within the three (3) restricting categories of “cause to the contrary” will not be considered. In CIMB Bank Bhd v. Sivakadatcham a/l P Sethuram Vandayar [2018] MLJU 719, the learned judge at para

has held “it is settled law that any categories which are not within the restrictive categories of “cause to the contrary” as laid out in the case of Low Lee Lian v. Ban Hin Lee Bank Bhd [1997] 1 MLJ 77 should not be taken into consideration by this Court. (This case involved purported wrongful calculation of interest). [50] Although the Defendant had canvassed other small issues regarding “cause to the contrary”, this Court opined that based on 21 the aforesaid main issue alone, the reasons advanced by the Defendant are not convincing enough to set aside the Order for Sale, considering the strong word of Section 256 of the NLC which used the word “shall make an order for sale” unless there is shown “a cause to the contrary”. The fact that the Chargor/Defendant did not strongly challenge the Plaintiff’s claim and that the Chargor/Defendant has even entered a consent judgment on 6th July 2018 (see Exhibit F) in the KL Suit No. WA-22NCC-34-01/2018 whereby the Chargor/Defendant has agreed to pay the whole debt under the Facilities, did not work in his favour to prove “cause to the contrary” such that the Court should refuse the Order for Sale. E. CONCLUSION [51] For the foregoing reasons, this Court found, with respect, that there was no merit in this application. Enclosure (11) was hence dismissed with cost of RM5,000.00. Dated: 10th April 2020 (DATO’ AHMAD BIN BACHE) Judge Civil High Court NCvC 3 Kuala Lumpur 22 Parties: Plaintiff/Respondent’s : Mr. C. H. Yeap Solicitors Messrs CH Yeap Maluda Cheh 18-3A, Udarama Complex Jalan 3/64A, Off Jalan Ipoh 50350 KUALA LUMPUR (Ref No.: F.Clo/110414/17/50(B)/YCH/rt) [Tel. No.: 03-40410405, Fax No.: 03-40411536, Email: info.chyeapmm@gmail.com] Defendant/Appellant’s : Mr. Pavendeep Sing Solicitors Messrs Paven & Co B-10-2, Wisma Pantai Plaza Pantai, No. 5 Jalan 4/83A Off Jalan Pantai Baru 59200 KUALA LUMPUR (Ref. No.: PC/L/MBB(TBT)/151/2019)