Rhb Bank Berhad v Mat Isa Bin Che Dir (BA-24FC-771-08/2024)

This is the Plaintiff’s Originating Summons seeking an Order for Sale and other consequential reliefs under Order 83 of the Rules of Court 2012 and sections 256 and 257 of the National Land Code. The Defendant had charged his land to the Plaintiff as security for a Housing Loan and an Overdraft Loan Facility. While the Housing Loan has been settled, the present proceedings arise from the outstanding sum under the Overdraft Loan Account.

The uniqueness of this case lies in the Defendant’s defence. He opposed the Plaintiff’s claim, contending that the nineteen withdrawal transactions or fund transfers from the Overdraft Loan Account on 20 December, 2019 were unauthorized and conducted without his knowledge or consent. The Defendant further denied having any online banking facility linked to the account and disclaimed any association with 3 the two recipients of the funds. The Plaintiff, however, maintained that the transactions were not compromised due to its negligence and asserted that they were a deliberate act by the Defendant.

The central issue for determination is whether the Defendant is liable for the outstanding sum under the Overdraft Loan Account. This requires the Court to assess the Defendant’s claim that the transactions were unauthorized and the Plaintiff’s contention that they were the Defendant’s deliberate act, not attributable to any negligence on its part.

The Plaintiff averred that detailed investigation that it had carried out revealed that the nineteen fund transfers for the total sum of RM126,620.00 were made from the Defendant’s Overdraft Loan Account by the account holder to two unknown third party accounts on 20 December, 2019 and that the transactions were made based on authorized user ID, password and One Time Password (“OTP”) which will only be given to the registered mobile number of the account holder via banking online facility.

The Plaintiff further asserted that its investigation also revealed that “the Defendant had deliberately disclosed his banking details, including the card number of the Overdraft account together with his security pin numbers to an unknown call received by him on 20 December, 2019 of which has compromised the security of his banking account and authorized as well as allowed the nineteen (19) fund transfer to occur”.

As the registered chargee, the Plaintiff argued that it has complied with and fulfilled the requirements under the relevant sections and provisions of the National Land Code and Order 83 of Rules of Court 2012 respectively, thereby entitling it to exercise its rights under the Charge to exercise its power to apply for an Order for Sale.

The Plaintiff underscored the point that this “Charge action” is an action in rem and not an action in personam to settle a debt.

The authorities cited by the Plaintiff to support the above contentions include Kandiah Peter v Public Bank Bhd [1993] 2 AMR 3464; [1993] 4 CLJ 332; [1994] 1 MLJ 119; [1993] 1 MLRA 505 (where it was held, inter alia, that a charge in seeking an Order for Sale does not sue for a debt) and Low Lee Lian v Ban Hin Lee Bank Bhd [1977] 1 AMR 1036; [1997] 2 CLJ 36; [1997] 1 MLJ 77; [1996] 2 MLRA 491 (“Low Lee Lian”)(on what may amount to a cause to the contrary).

In relation to the allegation that it was negligent and/or complicit in course of the events that had taken place, the Plaintiff submitted that it has acted in good faith in processing the transactions.

Relying on the Court of Appeal case of Public Bank Bhd & Anor v Exporaya Sdn Bhd [2013] 1 AMCR 191; [2013] 2 CLJ 753; [2013] 1 MLJ 507; [2012] 6 MLRA 466, the Plaintiff made the point that it has executed its duty in good faith given that it has in fact received a mandate to carry out the transaction from the account holder. According to the Plaintiff, a bank has the contractual duty to make the payment unless it has reasonable grounds for believing that there is fraud.

The Defendant vigorously argued that he had never applied for or activated any online banking and/or e-banking services in relation to the overdraft facility account with the Plaintiff.

The Defendant repeatedly said that the said account was always operated by way of a cheque book in performing transactions.

The Defendant also claimed that he had operated the said account for more than a period of twenty years and that the nineteen impugned online transactions that were performed for the first time on 20 December, 2019 were not his transactions.

The Defendant alluded to the fact that in or around 2019, an online facility was opened without his knowledge or consent, resulting in it being subsequently used to withdraw funds from his account.

It was contended by the Defendant that the Plaintiff “ought to have been prudent in verifying with the Defendant before releasing any monies to third parties particularly when involving such substantial sums of money”.

The Defendant averred that the Plaintiff was negligent and had failed to exercise their duty of care to the Defendant when the Plaintiff failed to inform the Defendant of the nineteen transactions within such a short period of time.

The Defendant also went on the accuse the Plaintiff of being complicit in all these transactions, alleging that the transactions/transfers were performed by the Plaintiff’s agents and/or servants.

Based on the above, the Defendant argued that the issues that have been raised “cannot be summarily resolved based on Affidavit evidence alone” – given the complexity and factual nature of the case. In short, it was the Defendant’s contention that the use of the Originating Summons process is flawed and is prejudicial to him.

It is deeply regrettable that either the Plaintiff or the Defendant will ultimately bear the loss resulting from the actions of the scammers or criminals who have absconded with the funds.

The Plaintiff, as the registered chargee, has commenced this action by way of Originating Summons. This Court is of the view that this is the correct mode of commencement.

This Court is also mindful that when a chargee, such as the Plaintiff in this case, enforces a statutory charge against the chargor, the Defendant, under section 256 of the National Land Code, the proceedings are undertaken in rem. In this regard, the burden rests on the Defendant to demonstrate to this Court the existence of a "cause to the contrary"