United Overseas Bank (Malaysia) Bhd v 1. ) Pheng Chin Shiun (BA-24FC-322-03/2025)

PHENG CHIN SHIUN … DEFENDANTS [NO. K/P: 740718-06-5035]

CHONG POOI NEE [NO. K/P: 741209-06-5242] GROUNDS OF JUDGMENT (Enclosure 20)

Enclosure 20 is the defendants' application to set aside the Order dated 3.6.2025 for the sale of the property held under Title of HS.(S) 124090, P.T No. 1583, Mukim Damansara, District of Petaling, Selangor, with costs.

On 29.8.2025, the High Court dismissed Enclosure 20 with costs for the following reasons.

The defendants are the directors of PCS Vision Sdn Bhd. In 2016, the plaintiff provided loan facilities to PCS Vision Sdn Bhd. The defendants have charged the land held under Title of H.S.(S) 124090, P.T. No. 1583, Mukim Damansara, District of Petaling, Selangor (the land) as security for the loan.

Due to PCS Vision Sdn Bhd's failure to pay the monthly installment of the said loan, the plaintiff terminated the loan facility on 11.11.2024 and demands the sum of RM6,744,318.63. On 14.1.2024, the plaintiff issued Form 16D against the defendants.

There was active communication between the plaintiff and the 1st defendant through letters dated 18.7.2024, 12.8.2024, and 30.9.2024, as shown in Enclosure 28, pages 100-104.

The defendants filed an affidavit in support dated 30.6.2025 and an affidavit in reply dated 4.8.2025. Among other reasons averred by the defendants are the following:

The defendants are unaware of the plaintiff’s claim against them.

(ii) There is no valid demand because the Form 16D was not properly served. As a result, the defendants are denied the opportunity to oppose the action, and the Order for Sale was issued without lawful authority.

(iii) It is unjust for the plaintiff to proceed with the Order for Sale before the borrower's scheme of arrangement is approved. ISSUE TO BE DECIDED

Whether the defendants have adduced facts that establish a cause to the contrary for the refusal of an order for sale.

Section 256 of the National Land Code states as follows – 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 undivided 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 to 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.

The Supreme Court in the case of Kandiah Peter v Public Bank Bhd [1993] 4 CLJ 332, held that - The principles governing the matter are well settled by authority and are not open to question. A chargee who makes an application for an order for sale in foreclosure proceedings under s. 256 of the Code does not commence an action. He merely enforces his rights as a chargee by exercising his statutory remedy against the chargor in default. The chargee, therefore, does not sue for a debt. It is also clear that his claim for an order for sale is not based upon a covenant but under the registered charge. The order for sale when made under s. 256 of the Code is not a judgment or a decree. The court hearing the application for foreclosure does not make, and in any event ought not to make, any adjudication upon any substantive issue.

The existence of the cause to the contrary within section 256(3) of the NLC has been explained in the case of Low Lee Lian v Ban Hin Lee Bank Bhd [1997] 1 MLJ 77, that the cause to the contrary within section 256(3) may be established only in three categories of cases –

The chargor is able to bring his case within any of the exceptions to the indefeasibility doctrine under section 340 of the NLC.

(ii) The chargor demonstrates that the chargee has failed to meet the conditions precedent for the making of an application for an order for sale.

(iii) The grant of an order for sale would be contrary to some rule of law or equity. ANALYSIS AND DECISION Issue: Whether the defendants have adduced facts that establish a cause to the contrary for the refusal of an order for sale.

Having reviewed the defendant’s affidavits, it is evident that the defendant never denied that the money had been disbursed to PCS Vision Sdn Bhd in accordance with the facilities agreement entered into with the plaintiff. Based on the principle outlined in the case of Low Lee Lian v Ban Hin Lee Bank Bhd (supra), the defendant has the right to pursue any or all remedies to recover the monies lent. The defendant may enforce their statutory charge against the charger through proceedings in rem under section 256 of the NLC. The plaintiff may also sue the company that is the principal debtor under the loan agreement they entered into. In exercising their rights, the plaintiff is permitted to pursue all those courses simultaneously, concurrently, or successively as determined by China and South Sea Bank Ltd v Tan [1989] 3 All ER 839.

The defendants cited the case of Lee Gee Pheng v RHB Bank Berhad [2003] 4 CLJ 639 and argued that the order for sale was obtained without the defendant being present in court by virtue of O.28 rule 4(1), order 32 rule 6 and Order 35 rule 2 of the Rules of High Court. The learned counsel for the defendants referred to Lee Gee Pheng’s case and submitted that a final order may be set aside or amended without the need to appeal.

The defendants argued that –

The plaintiff did not serve Form 16D on the defendants. The defendants did not receive Form 16D, despite the plaintiff claiming that it was personally served on them.

(ii) The plaintiff failed to serve the cause papers, and the defendants were not informed of the hearing date.

(iii) There is no letter informing the defendant of the hearing date as stated in the advertisement of substituted service.

After examining the defendant’s affidavits, this Court finds that the parties are bound by the terms in the Charge. The notices issued to the defendants are made pursuant to clauses 10.2(b), 10(3)(c). 13(b) and 13 (c)(ii) of the Charge, which state that any notice issued to the defendant by way of post shall be conclusive proof of delivery.

The Court refers to the decision of the Supreme Court in Amanah Merchant Bank Bhd v Lim Tow Choon [1994] 1 MLJ 413, which held that the words ‘shall be deemed’ in the clause before them meant ‘shall be regarded as,’ indicating that the deeming was not intended as a presumption and was therefore not rebuttable.

This Court also finds that the address used by the plaintiff was the one provided by the first defendant as their official or registered address. Therefore, it cannot be argued that the service was improperly carried out. The address was supplied by the defendants, not by others. It is the defendant's duty to notify the plaintiff of any address change, and until then, this address will be considered their last known address.

The defendants are also now contesting the order for the delivery of vacant possession of the property and the order allowing the proposed bidder to inspect the property. This Court is satisfied that the relief sought is consistent with Order 83 Rule 1(1)(d) of the Rules of Court 2012 and clause 10.6 of the Charge. Clause 10.6 of the Charge states –

10.6 Vacant possession When the powers of sale under the Land Code becomes exercisble by the charge, the charger will deliver vacant possession of the Land to the Chargee, or any person authorised by it, immediately on receiving the Chargee’s written demand.

The defendants have agreed to deliver vacant possession of the property upon the plaintiff exercising its statutory remedy for sale. Therefore, this Court is bound not to decide otherwise.

This Court is of the view that the defendants failed to adduce facts that establish cause to the contrary to enable this Court to set aside the Order for sale dated 3.6.2025.

Based on the reasons above, this Court dismissed Enclosure 20 with costs of RM2,000.00, subject to allocators. Dated: 18th November 2025. Signed ………………………………………….. HAZIZAH BINTI KASSIM Judicial Commissioner High Court of Malaya At Shah Alam (NCvC10) At Shah Alam, Selangor

For the Plaintiff : Yip Yi Wen & Sam Huai Hao Messrs. Raja, Darryl & Loh (Wilayah Persekutuan Kuala Lumpur)

For the Defendants : Tan Shin Shin Messrs. Jasbeer Nur & Lee (Wilayah Persekutuan Kuala Lumpur)