Shana Binti Azahari (Pelikuidasi bagi Pihak Mines Resort Sdn Bhd (Dalam Penggulungan)) v Malayan Banking Berhad (BA-22NCC-75-06/2023)

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DALAM MAHKAMAH TINGGI MALAYA DI SHAH ALAM DALAM NEGERI SELANGOR DARUL EHSAN (BAHAGIAN DAGANG) GUAMAN NO: BA-22NCC-75-06/2023 ANTARA SHANA BINTI AZAHARI (No. K/P: 891022-10-5412) [Pelikuidasi bagi pihak Mines Resort Sdn Bhd (Dalam Penggulungan) (No Syarikat: 186054-A)] PLAINTIF DAN MALAYAN BANKING BERHAD (No. Syarikat: 3813-K) DEFENDAN GROUNDS OF JUDGMENT Introduction [1] The Defendant had granted banking facilities to one Cenmal Commercial Sdn Bhd that were secured by various securities. One such security is a third-party charge over fourteen (14) pieces of land located at Pekan Baru Sungai Besi, Daerah Petaling, Selangor Darul Ehsan ( ). The Charge was created in favour of the Defendant by Mines Resort Sdn Bhd. [2] Mines Resort Sdn Bhd was voluntarily wound up on 28-02-2017 and is the Plaintiff in this action, acting through its liquidator. The Plaintiff filed this action to seek an order that the Charge be declared null and void and for various consequential orders. The Defendant subsequently applied vide Enclosure 92 to have two (2) questions determined under Order 14A Rule 1 of the Rules of Court 2012 ( . [3] I allowed Enclosure 92 and upon determination of the questions -10-2024 with costs of RM15,000.00. These are the reasons for my decision. Analysis of Questions [4] The Defendant framed the following questions of law to be determined which it argued, could finally determine the entire cause in this action without the need for a full trial ( ): Question 1 Whether reliefs (a), (g), (h), (i), (j), (k) and (l Statement of Claim are barred by the principle of res judicata and/or issue estoppel in view of the decision of the High Court in Originating Summons No. BA-24FC-673- OS 673 and Originating Summons No: BA 24FC-1147- OS 1147 Question 2 Whether the Order for Sale dated 3-7-2020 ( and Order dated 3-7-2020 in OS 673 are final orders and valid and binding, and the Court had become functus officio to decide on the validity of the Charge and set aside the Order for Sale. [5] The Plaintiff opposed Enclosure 92 because it was pointed out that this Court had previously dismissed an application by the Defendant to strike out the claim under Order 18 Rule 19(1)(a), (b) and/or (d) of the RC, and that there are disputed facts interwoven with the legal issues concerning the validity of the Charge. The Plaintiff contended that the Questions are not suitable questions for summary determination and the case should proceed to full trial. Prior Striking Out [6] Essentially, the Plaintiff contended that the necessity for a full trial is res judicata following application under Order 18 Rule 19(1)(a), (b) and/or (d) of the RC; and that proceeding by way of Order 14A Rule 1 of the RC is a collateral attack on the dismissal of the striking out application. I deal briefly with the question of whether the Plaintiff is right on this. The short answer is no, because the two (2) powers operate on different principles (See Nora Hayati v Amanah Raya Bhd [2012] 10 CLJ 634). [7] For instance, it is entirely justified to refuse a striking out because of a difficult question of law which calls for detailed argument (See Abdul Rahim Abdul Hamid & Ors v. Perdana Merchant Bankers Bhd & Ors [2000] 2 CLJ 457). However, a court should not decline to consider an application under O. 14A simply because the question of law or issue of construction is or appears to be complicated (See Petroleum Nasional Bhd v. Kerajaan Negeri Terengganu & Another Appeal [2003] 4 CLJ 337). [8] Further, it cannot be said that there is finality on any issue which remains undetermined because it was left to full trial after a failed striking out application. Since the introduction of Section 68(1)(f) of the Courts of Judicature Act 1968, the dismissal of a striking out application has been rendered non-appealable. Thus, there was no appeal or written grounds of Judgment for the dismissal of the striking out application in this case to say anything conclusive about the issues raised by the Questions. [9] Unless the Plaintiff can show that the Judge had made conclusive findings about the issues raised by the Questions that preclude its ventilation otherwise than at full trial, this argument advanced by the Plaintiff why Enclosure 92 should be dismissed did not persuade me. Disputed Facts [10] The Plaintiff also did not show that the Questions turn on any disputed facts. To the extent that the Plaintiff had raised disputed questions of fact relating to the reasons why the Charge is alleged to be invalid and why therefore, the OFS ought to be set aside, namely: a) whether the Form 16A executed by the Directors of the Plaintiff was a valid instrument under the National Land Code 1965; b) whether the Court had jurisdiction to hear OS 673 based on an insufficient instrument under the National Land Code 1965; c) whether the Court had jurisdiction if the Charge is defective from the start; and d) whether the OFS made based on an illegal charge granted by a Court with no jurisdiction to do so is valid; the Plaintiff had missed the point of the Questions. It is precisely the point of the Questions that this Court may not revisit the issue of the validity or otherwise of the Charge regardless whether that issue was decided rightly or wrongly in OS 673 and OS 1147. Therefore, the facts relating to that issue did not feature in the determination of the Questions. I did however, deal with the submission on illegality and want of jurisdiction as explained further below as part of the answer to the Questions. [11] I therefore found that there was merit in determining the Questions to avoid an unnecessary full trial. Both parties had also been heard on their answers to the Questions through written submissions filed on 12-8-2024 and 28-8-2024. [12] In case it is relevant, the hearing of Enclosure 92 was fixed on 18-10-2024 after the original hearing date on 20-9-2024 was vacated at . On 15-10-2024, solicitors applied to discharge themselves. As the application for discharge was not ready for hearing and the solicitors were still on record, I invited counsel to make oral submissions on Enclosure 92. [13] Although written submissions had been filed, counsel for the Plaintiff declined to submit orally no instructions, no mandate Hence, I only heard highlights from counsel for the Defendant on 18-10- 2024, after which I allowed Enclosure 92 and answered both Questions in the affirmative. I set out below, the reasoning behind the answers to the Questions. Facts Relevant to the Questions [14] OS 673 was an application filed by the Defendant for an Order for S Charge. The Plaintiff opposed OS 673 and filed OS 1147. Both OS 673 and OS 1147 were heard by the same Judge. On 3-7-2020, the Judge allowed OS 673 and granted an Order for Sale (i.e. the OFS). The Judge also dismissed OS 1147 with costs. The Plaintiff did not appeal either decision. [15] The OFS in OS 673 is standard and well-understood. OS 1147 was filed by the Plaintiff in response to OS 673 and sought the following orders: [16]

Preamble

Pursuant to the OFS, several summonses for directions were taken out between September 2020 and May 2023 to set down auction dates. The Plaintiff filed this action on 14-6-2023 together with an application for an interim injunction to stop an auction that was fixed on 21-6-2023. That auction was the last of the series of auctions ordered under the OFS, that is to say, the Charge that is the subject matter of this action is the same Charge as in OS 673 and OS 1147. [17] In this action, the Plaintiffs prayed for the following remedies: Injunction to restrain auction Declaration that the Charge is void Determination of the Questions [18] It was not seriously disputed that the issues raised by the Statement of Claim were substantially the same issues which had been raised or which should have been raised in OS 673 and OS 1147. From the facts as set out above, the remedies in prayers (a), (i), (j) and (k) of the Statement of Claim in this action are substantially identical to the prayers in OS 1147, and the remedy in prayer (g) of the Statement of Order to set aside OFS Consequential orders Injunction to restrain auction Claim is to impeach the OFS in OS 673 which was premised on the validity of the Charge. [19] As framed, Question 1 referred to all of the abovementioned reliefs with the addition of prayer (l) on costs and damages, which I regard as part of the consequential orders prayed for. Question 2 raised a more fundamental question which I will address first. Question 2 Functus Officio [20] It did not escape in [10] above allude to illegality and want of jurisdiction as it relates to the Orders of the Court in OS 673 and OS 1147. Evidently, this is because those factors are exceptions to the rule against any impeachment of a valid and binding Order of Court in a fresh action as explained by the Federal Court in the case of Badiaddin bin Mohd Mahidin & Anor v Arab Malaysian Finance Bhd [1998] 1 MLJ 393 ( ). [21] Badiaddin concerned at its core, a third-party charge found to be null and void for breach of the Malay Reservations Enactment. The Order for Sale granted pursuant thereto was consequently declared to be invalid ( ). Subsequently, the chargee applied to the same Judge for a declaration that the chargors had received an advantage and sought redress under Section 66 of the Contracts Act 1950. On that application, the Judge made a second order that the land be sold and its proceeds be utilized to pay the balance outstanding on the loan ( ). [22] The High Court set aside the 1990 Order on grounds that it was made without or in excess of jurisdiction. The Court of Appeal overturned it on grounds that the High Court was functus officio after making the 1988 Order based on the case of Hock Hua Bank Bhd v Sahari bin Murid [1981] 1 MLJ 143 in that one High Court cannot set aside a final order regularly obtained from another High Court of concurrent jurisdiction except under the slip rule and in cases where the order had been obtained by fraud. The majority of the Federal Court in Badiaddin restored the High Court decision that set aside the 1990 Order and held as follows: But one special exception to this rule (which was not in issue and therefore not discussed in Hock Hua Bank) is where the final judgment of the High Court could be proved to be null and void on ground of illegality or lack of jurisdiction so as to bring the aggrieved party within the principle laid down by a number of authorities culminating in the Privy Council case of Isaacs v Robertson [1985] AC 97 where Lord Diplock while rejecting the legal aspect of voidness and voidability in the orders made by a court of unlimited jurisdiction, upheld the existence of the order is entitled to apply to have set aside ex debito justitiae in the exercise of the inherent jurisdiction of the court, without his needing to have recourse to the rules that deal expressly with proceedings to set aside orders for irregularity, and give to the [23] As clarified in Badiaddin, the only known category of cases in which the inherent jurisdiction may be invoked to set aside an Order of Court ex debito justitiae as an exception to the rule in Hock Hua Bank is where that Order of Court is a nullity. This arises in a limited number of situations where the Court had no jurisdiction to decide the matter and where the Order of Court, if not set aside, would stand in contravention of a substantive statutory prohibition. Per Azmi FCJ (whom Gopal Sri Ram FCJ agreed with in a separate judgment): t apart from breach of rules of natural justice, in any attempt to widen the door of the inherent and discretionary jurisdiction of the superior courts to set aside an order of court ex debito justitiae to a category of cases involving orders which contrav contravention should be one which defies a substantive statutory prohibition so as to render the defective order null and void on ground of illegality or lack of jurisdiction. It should not for instance be applied to a defect in a final order which has contravened a procedural requirement of any written law. The discretion to invoke the inherent jurisdiction should also be exercised judicially in exceptional cases where the defect is of such a serious nature that there is a real need to set aside the defective order to enable the court to do justice. In all cases, the normal appeal procedure should be adopted to set aside a defective order, unless the aggrieved party could bring himself within the [24] In this case, the underlying complaints are firstly, that the Charge is said to have wrongly described the Plaintiff as a Principal Debtor and secondly, that the Memorandum and Articles of Association of the Plaintiff did not authorize the directors of the Plaintiff to execute the Charge. I find that these complaints do not come within the special exception of illegality or excess of jurisdiction by the High Court in OS 673. They did not involve any defiance of a substantive statutory prohibition, but were ordinary arguments to raise a cause to the contrary why an order for sale should be refused. Having been decided on their merit, the proper approach for the dissatisfied party would be to appeal. [25] For completeness, there was also no allegation that the Plaintiff was not heard or that fraud was involved in procuring the orders in those proceedings. [26] In the circumstances, I answered Question 2 in the affirmative, in that the Order for Sale dated 3-7-2020 is a final, valid and binding order, and the Court had become functus officio to decide on the validity of the Charge and set aside the Order for Sale. This Court therefore, considered itself bound by Hock Hua Bank and saw no basis to re-open OS 673 and OS 1147 in a trial of this action. Question 1 Res Judicata/Issue Estoppel [27] As an answer to Question 1, the Plaintiff submitted that res judicata and issue estoppel do not apply to this action, citing the case of Kandiah Peter v Public Bank Bhd [1994] 1 MLJ 119 ( ). In that case, the charger had unsuccessfully applied to set aside an Order for Sale, and later sued for a declaration that the charges were null and void. The High Court dismissed the later action on grounds of estoppel and res judicata. [28] On appeal however, the Supreme Court in Kandiah held that the chargor was not estopped by res judicata from raising in the subsequent action, identical issues which had been raised in the foreclosure proceedings, because a prior foreclosure action does not result in a final judgment or decree. [29] In the case of Low Lee Lian v Ban Hin Lee Bank Bhd [1997] 1 MLJ 77 , the Federal Court explained that Kandiah did no more than to affirm that a judge hearing an application under Section 256(3) of the National Land Code 1965: a) is concerned only with the narrow and limited question of whether there is cause to the contrary to resist it, these being; i) grounds that render the registered charge defeasible; ii) procedural defects in the application for an Order for Sale or; iii) some rule of common law or doctrine of equity (prevailing over the interests of a registered chargee) against which an Order for Sale would militate; and b) is not concerned with whether the same facts are sufficient to support an action in personam against a chargee based on personal obligations that bind his conscience not to enforce the charge. There is thus, no determination of an issue or a cause for an estoppel to operate against a c in personam against the chargor. [30] In the words of the Federal Court in Low Lee Lian: decision in Kandiah that permits a chargor in a subsequent action to set aside an order for sale granted by the court inter partes. That may not be done in the absence of an allegation of fraud in the procurement of the order. See Hock Hua Bank Bhd v Sahari bin Murid [1981] 1 MLJ 143. If a chargor is unhappy with an order for sale made inter partes, his only remedy is to appeal against it as has been done in the present case. All that Kandiah decides is that the making of an order for sale does not bar an action in personam between the same parties [31] In this case, the validity of the Charge is an issue that goes registered chargee and is presumed to have been fully ventilated in OS 673. More importantly, the Plaintiff had additionally brought OS 1147 against the Defendant, an action free of the strictures of the foreclosure proceedings in OS 673. Any in personam cause of action that the Plaintiff may have , properly belonged in that litigation. [32] Since both OS 673 and OS 1147 had been decided against the Plaintiff and the Plaintiff did not appeal either decision, all issues that properly belonged in both of those actions are res judicata, following Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ