BANK OF CHINA (MALAYSIA) BERHAD v LEE KIM TIONG @ LEE KIM YEW

Case Significance

Illustrates the 'cause to the contrary' analysis under section 256 of the National Land Code (per Low Lee Lian): a chargor resisting an order for sale by asserting that a pledged fixed deposit extinguished the debt must prove that the conditions for discharge were satisfied, and failing that, the order for sale is made.

This High Court decision at Shah Alam, delivered by Judicial Commissioner Elaine Yap Chin Gaik, concerns an application for an order for sale of charged land under the National Land Code and the scope of a chargor's right to show "cause to the contrary". The plaintiff, Bank of China (Malaysia) Berhad, sought an order for sale under section 256 of the National Land Code and Order 83 of the Rules of Court 2012 over land charged to it. The defendant chargor opposed the application, contending that the Form 16D notice demanded sums that were not lawfully due, and that the existence of a pledged fixed deposit of some RM121 million, referred to in the plaintiff's own documents, was sufficient to extinguish the secured debt — a matter that, he argued, raised a genuine question as to the very existence of the debt.

The court granted the order for sale, holding that no cause to the contrary had been established. It approached the matter through the settled framework in Low Lee Lian v Ban Hin Lee Bank, under which a chargor may show cause in law or equity, including by demonstrating that the very existence of the debt is in genuine doubt, and the court will refuse an order where it would be unjust to make one. On the evidence, the court was not persuaded that the pledged fixed deposit had in fact extinguished the debt: while the plaintiff's letters had provided for the conditional discharge of certain securities, including the fixed deposit, there was no evidence that the conditions for that discharge had been satisfied. The court therefore concluded that the defendant had not brought himself within any recognised category of cause to the contrary, and it made the order for sale sought. The judgment is a useful illustration of the "cause to the contrary" analysis under section 256 of the National Land Code and of the evidential burden on a chargor who asserts that the secured debt has been discharged.