Question (a) - Cases

The case of Kimlin Housing Development Sdn. Bhd. v Bank Bumiputra Malaysia Bhd. & Ors1

laid down the elements of the procedure for the order for sale. In this case, it was mentioned that

Form 16D will be served according to s.254 of the National Land Code (NLC) where there has

been a breach ongoing for at least 30 days. The party who committed the breach is required to

remedy it or proceedings for order for sale will commence. S.255 NLC provides alternative where

a notice in Form 16E will be served, immediately upon such breach and that if not remedied, an

action for a judicial sale will take place.

Furthermore, in Kimlin’s2 case, it was mentioned that the court will ensure the requirements under

NLC are complied with, before making an order for sale and the charger will be given the

opportunity to show that there is a ‘cause to contrary’ in order to stop the court from granting the

order for sale.

An issue regarding the procedure of an order for sale is whether the use of the wrong form is

detrimental. In Mary Michael v United Malayan Banking Corporation Bhd. [1971] 1 MLJ 172,

the court had said the following, “It is to be observed that a notice in Form 16D applies to any

charge…”3 The court also said that “…Form 16D can be used whether or not the principal sum is

payable on demand Form 16E can be used only if the principal sum is payable on demand.”4

However, this has caused some confusion and this confusion was clarified in the case of Jacob v

1
[1997] 3 CLJ 274
2
Ibid
3
[1971] 1 MLJ 172 at 173
4
Ibid
Oversea-Chinese Banking Corporation, Ipoh5 where the court held that the use of Form 16D or

Form 16E is not detrimental for payment on demand, according to the words of s.62 of the

Interpretation Act No. 23 of 1967 which states that the instrument shall not be invalidated if there

is deviation where the deviation has no significant consequence and there exists no intention to

delude.

This principle was further reinforced in the case of Bank Bumiputra Malaysia Bhd v Mahmud

Bin Haji Mohamed Din (Datin Hajjah Salma Bte Md Jamin, Intervener)6 which also held that

Form 16D issued was not defective although there was a minor irregularity as the object was to

give ample and appropriate period of notice to the chargor before applying for an order for sale.

The recent position can be seen in Affin Bank Bhd v Chia Lak Bah & Anor7 states the following,

“The position is that Form 16D may be used even in the case of a charge where the

principal sum is payable on demand and there is Form 16E for that purpose, and that

Form 16D is not required if there is a demand under Form 16E. In the instant case, it was

just futile to insist on Form 16D.”8

Therefore, it can be said that since the objective is to give sufficient notice to the chargor before

commencing action for an order for sale, the use of Form 16D or Form 16E is unlikely to be

detrimental if used incorrectly.

5
[1974] 2 MLJ 161
6
[1989] 1 MLJ 381
7
[2009] 7 CLJ 197
8
Ibid at [15]
In the case of RHB Bank Bhd. v Syarikat Sungei Nal Timber Industries Sdn. Bhd.9, the issue

that is raised regarding Form 16D is that the form was not served and that the breach was not

specified in the form. Regarding the issue that the Form 16D was not served, the court held that

the provision under s.431(2) NLC has been complied with, thus it is deemed to have been served

upon the defendant. Next, it was also held that the breach stated in Form 16D was adequate as an

earlier letter was posted to the defendant specifying the amount to be paid and that a warning was

stated in that letter as well.

In Maimunah Bte Megat Montak v Mayban Finance Berhad10, the court held that an order for

sale must be in Form 16H and must have the particulars set out in line with s.257 NLC. The

provisions under s.257 NLC were mandatory and if it was not conformed with, the order for sale

under s.256 NLC will be invalidated. In the case of Diamond Peak Sdn. Bhd. v United Merchant

Finance Bhd. 11 , the appellant argued that the respondent had failed to comply with the

requirements under O.83 of the Rules of High Court 1980 by not stating the date which the public

auction is to be held and thus, the order for sale should be set aside. The court held that the date

must be specified and that the order is not valid because it contravenes s.257(1)(b) NLC.

Another issue raised was whether a service was not to a registered office will invalidate the order

for sale. This issue was discussed in Kekatong Sdn. Bhd. v Bank Bumiputra Malaysia Bhd. [1998]

2 CLJ 266. The court in this case held that the service was not in accordance with the provisions

of NLC because although the word is ‘may’, in this case it is a ‘must’. The reason is that ownership

9
[2007] 4 MLJ 567
10
[1996] 3 CLJ 9
11
[2003] 2 MLJ 346
of immovable property is a fundamental right under Article 13 of the Federal Constitution and

deprivation of such must comply strictly with both substantive and procedural law. Therefore, the

service was not done according to the provision under NLC, rendering the order for sale to be void.

Moving on, the issue of whether the notice of demand will be invalid where there is a wrongful

demand of default interest is laid down in the case of Co-Operative Central Bank Ltd v Meng

Kuang Properties Bhd.12 where the court held that “It is not a simple case of the said notices of

demand containing an erroneous sum but it is a case where the said notices were demanding

payment of something to which the plaintiff bank had no right.”13 This was reaffirmed in the case

of Perwira Affin Bank Bhd. (formerly known as Perwira Habib Bank Ma-laysia Bhd.) v WT

Low & Ng Realty Sdn. Bhd. [1997] 5 MLJ 185 and Kwan Chew Holdings Sdn Bhd v Kwong Yik

Bank Bhd. [2010] 6 MLJ 157 where the court have held respectively that there has been a failure

to comply with Order 83 of the Rules of High Court 1980 (replaced by Rules of Court 2012) where

there is a unlawful demand of sum from the chargee.

Lastly, the issue is when the sale is concluded. According to M&J Frozen Food Sdn. Bhd. v

Siland Sdn. Bhd. [1994] 1 MLJ 294, the sale is concluded ‘at the fall of the hammer’ and at that

stage, a contract exists between the vendor and the highest bidder. It was also mentioned that the

proprietary rights to the land does not pass to the purchaser until registration.

12
[1991] 2 MLJ 283
13
Ibid at 288