23.09.2024 Cancelled due to no bidder. [10] It is pertinent to note that the Defendant is an undischarged bankrupt, having been adjudged bankrupt on 16 October, 2017. [11] The present Order for Directions in Enclosure 1 was filed on 14 October, 2024. [12] This Originating Summons in Enclosure 1 was served on the Director General of Insolvency (DGI) on 21 October, 2024 and on the Defendant himself on 18 October, 2024. [13] The hearing date for Enclosure 1 was fixed on 27 November, 2024 before the Deputy Registrar. [14] The Defendant’s primary point of disagreement relates to the event that took place during the hearing on 27 November, 2024. As the Defendant had not obtained prior sanction from the DGI to defend the action, the learned Deputy Registrar ruled that the Defendant should not be heard in the absence of such sanction. [15] The learned Deputy Registrar who presided over the application granted an Order for Directions, setting the auction date for 21 January, 2025 at the reserve price of RM1,440,000.00. [16] It should be noted that the DGI raised no objections and the Defendant’s counsel was present at the hearing. [17] Equally noteworthy is the fact that the reserve price of RM1,440,000.00 fixed by the Deputy Registrar in the Order for Directions dated 27 November, 2024 is lower than the value as indicated in the Plaintiff’s Valuation Report dated 13 February, 2023, where the market value of the said Property was valued at RM2,000,000.00. The Overarching Issues [18] The predominant issues for determination, as couched by the Defendant, which this Court agrees, are: I. Whether the Defendant was entitled to be heard by counsel at the hearing before the Deputy Registrar? II. Whether the "limiting conditions” clause in the Valuation Report can be admissible as evidence to determine the value of the said Property?; and III. Whether the reserve price fixed in the Order dated 27 November, 2024 causes prejudice to the Defendant? The Defendant’s Contention [19] The Defendant challenged the Order made by the learned Deputy Registrar based on three main grounds. The Right to be Heard [20] The first of the three main contentions relate to the argument that the Defendant was entitled to be heard by counsel at the hearing before the Deputy Registrar. [21] This line of argument is premised on the ground that he was entitled to appear in his own right to put before the Registrar his views on what the reserve price for the said Property should be. [22] According to the Defendant, this was not a matter that is curtailed by section 8 of the Insolvency Act 1967. The Defendant asserted that “there are no legal impediments as the matter was not subject to the Defendant requiring sanction from the DGI to appear”. Hence, the Defendant submitted that he was “entitled to present his views on what the said Property reserve price should be”. The Reserve Price [23] The second principal contention by the Defendant was that when the learned Deputy Registrar fixed RM1,440,000.00 as the reserve price, that was significantly lower than the stated market value. (This led the Defendant into filing a Notice of Appeal to the Judge in Chambers (in Enclosure 8) dated 18 December, 2024 to appeal the decision given by the Deputy Registrar on 27 November, 2024.) [24] The Defendant made reference to sections 257(1) and 259 of the National Land Code and asserted as follows: … based on the Plaintiff's Valuation Report dated 13.02.2023, as stated in Exhibit GJN-4, page 46, of Enclosure 2, the market value of the property is RM2,000,000.00. However, it is evident that the Plaintiff has sought a reserve price of RM1,440,000.00, which is substantially below the stated market value. [25] Hence, it was contended by the Defendant that the Plaintiff's application for the execution of the Order for Sale dated 27 November, 2024 did not comply with section 257(1)(d) read with section 259 of the National Land Code, in light of the reserved price of RM1,440,000.00 sought by the Plaintiff. [26] The Defendant repeatedly underscored the fact that the reserve price of RM1,440,000.00 “is significantly below the market value of the said Property”. [27] The Defendant further submitted that in addition to the statutory duty imposed under Section 257(1)(d) of the National Land Code, “the chargee has a concurrent duty of care to ensure that the property is valued at its true market value for the purpose of the sale”. In arguing that the Valuation Report relied upon by the Plaintiff “does not, and in fact could not, satisfy the requisite legal standard for an accurate market valuation”, the Defendant referred this Court to the case of Maimunah bte Megat Montak v Maybank Finance Bhd [1996] 2 AMR 2473; [1996] 3 CLJ 9; [1996] 2 MLJ 422 SC; [1996] 1 MLRA 446, which had referred to the judgement in Citibank NA v Ibrahim bin Othman [1994] 1 AMR 369; [1993] CLJU 104; [1994] 1 MLJ 608; [1993] 5 MLRH 153, where the Court held that: The provisions of s257(1)(a)-(d) of the Code were mandatory, and as the order for sale in the present case had suffered from the defects as herebefore mentioned, it was thereby invalidated. [28] The Defendant also cited the cases of Asia Commercial Finance (M) Bhd & Anor v Development & Realtor Sdn Bhd [1992] 2 CLJ Rep 109; [1992] 2 MLJ 504; [1992] 1 MLRH 441 for the proposition that a “chargor has the right to ensure that the land is sold at the market value prevailing on the date of the sale” and Eu Finance v Sim Sen Organization [1990] for the proposition that “in the event of a sale below market price taking place, the Defendant has the rights to set aside the sale itself”. The “Limiting Conditions” Clause [29] Last but not least, the Defendant also alluded to the "limiting conditions” clause in the Valuation Report, questioning whether such clause can be admissible as evidence to determine the value of the said Property. [30] The Defendant submitted at length on this ground, arguing that the conclusion to be derived from an examination of the various clauses in the Valuation Report, particularly Clause 3 (on Confidentiality), Clause 4 (on Limiting Conditions), and Clause 19 (Validity Period of a Valuation Report) is that: … limiting conditions set forth in the valuation report delineate the scope of the valuation, explicitly outlining the purposes or to whom for which the valuation conclusion may not be used, as well as the conditions under which the valuation conclusion retains its validity. It is clear that the Valuation Report is not valid for the purpose of use in this court by the Plaintiff or the DR to determine the valuation. The Valuation Report expressly excludes that. The Defendant submits that the valuation report is confidential and intended solely for the use of the party to whom it is addressed, in this case, the Plaintiff. Hence, the valuation report cannot be tendered as evidence before this court to reflect the purchase price and/or reserve price of the Property without the express written consent of the valuer. The Defendant further submits that no written consent from the valuer has been obtained for the Valuation Report to be presented or submitted to the Court by the Plaintiff in support of the tendering of the Valuation Report for the purpose of determining the sale price of the said Property in the auction proceedings. [31] In support of the above propositions, the Defendant relied on the case of Skin Renew International (M) Sdn Bhd v Formasi Kembara Sdn Bhd & Anor [2020] CLJU 347; [2020] MLJU 419; [2020] MLRHU 325 and section 73A(1) of the Evidence Act 1950. The Plaintiff’s Contentions [32] On the issue of the reserve price, the Plaintiff put forward the following arguments. [33] The Plaintiff highlighted the fact that the reserve price was fixed for the 8th public auction. [34] It was contended by the Plaintiff that the learned Deputy Registrar did not commit any error in fixing the reserve price at RM1,440,000.00 as that is “allowed by the law”. [35] The Plaintiff also cited cases such as NKM Properties Sdn Bhd v Rakyat First Merchant Bankers Bhd [1992] 1 AMR 1; [1992] 1 CLJ Rep 244; [1992] 2 MLJ 349; [1992] 1 MLRA 261 and Malayan Banking Bhd v Aldwych Capital Sdn Bhd [2021] CLJU 595; [2021] 10 MLJ 1; [2021] MLRHU 2805 on the application of section 259(2)(c) of the National Land Code (before the amendment) and the Arahan Amalan Pendaftar Mahkamah Tinggi Malaya Bilangan 1 Tahun 2017 respectively. [36] The core argument advanced by the Plaintiff is that: … given this is already the 8th auction with no bidders at reserve prices ranging from RM2,300,000.00 to RM1,600,000.00, the reserve price should be further reduced from RM1,600,000.00. A lower reserve price is necessary to attract bidders, who may then compete and drive the price higher, as observed by the Court in the case cited above. [37] To further substantiate the above submission, the Plaintiff referred to the case of Hong Leong Finance Bhd v Laysa View Sdn Bhd [2010] 1 AMR 252; [2010] 9 CLJ 55; [2009] MLJU 798; [2009] 4 MLRH 647 where the court observed as follows: [17] It is also important to note from a practical standpoint that properties sold via auction hardly ever get sold at the market price. Lest it be forgotten, even in this instant case, the property was first put up for sale initially at RM960,000 but there were no bidders. People who frequent auctions are bargain hunters. This is an undeniable truth. Most of them adopt a wait and see approach - basically waiting patiently for the reserve price to plummet after a series of failed auctions. If it were otherwise, we would not need auctions to dispose of charged properties. The chargors could very well find buyers to purchase their properties at the "market value". But the fact of the matter is that it is never a simple matter to offload a property and this is the reason why even prime properties go through so many rounds of failed auctions and consecutive reductions of reserve price before bidders come on the scene. [38] The Plaintiff impressed upon this Court that the party that stands to suffer from such an outcome is the Plaintiff/Chargee, which has already incurred substantial costs in foreclosure proceedings and multiple execution attempts. The Plaintiff reminded this Court that “these expenses, which continue to accumulate, are irrecoverable from the Defendant, who is already an undischarged bankrupt”. [39] Accordingly, the Plaintiff submitted that “the reserve price of the Property should be set at a realistic value to ensure a successful auction and to prevent further unnecessary financial prejudice to the Plaintiff”. The Decision of this Court [40] The issues presented in this appeal against the Order of the learned Deputy Registrar are straightforward. [41] Recognising the seriousness of the Defendant’s claim regarding the right to be heard, this Court granted an interim stay of the auction at the hearing on 6 January 2025, pending the disposal of this appeal. To ensure that the Defendant had a full opportunity to present his case, this Court fixed 20 January, 2025 for his submissions. [42] At that hearing on 20 January, 2025, the Defendant was afforded every opportunity to be heard and to present his arguments. As such, any issue regarding the denial of his right to be heard before the learned Deputy Registrar has been duly addressed. [43] This brings us to the central issue — the determination of the reserve price by the learned Deputy Registrar. This matter is of no less significance. [44] The Defendant’s primary contention appears to be that, based on the Limiting Conditions clause, the Valuation Report should not be taken into account. However, paradoxically, the Defendant has also repeatedly argued that the learned Deputy Registrar disregarded the market value of RM2,000,000.00 stated in the very same Valuation Report and instead fixed a reserve price of RM1,440,000.00. [45] At first glance, this line of argument appears contradictory. However, upon closer scrutiny, the essence of the Defendant’s position is that the reserve price of RM1,440,000.00 falls significantly below the market value of the property because the Plaintiff’s Valuation Report “does not, and indeed could not, meet the requisite legal standard for an accurate market valuation.” [46] In determining the validity of the reserve price, it must be assessed in accordance with the legal requirements prescribed under the National Land Code. [47] Section 257(1)(d) of the National Land Code mandates that the Registrar of the Court fix a reserve price for the sale, which must be equal to the estimated market value of the land or lease in question. [48] Crucially, section 259(2)(c) of the National Land Code provides that: