RHB BANK BERHAD v MAT ISA BIN CHE DIR

Case Significance

Applies the cause-to-the-contrary threshold in section 256(3) of the National Land Code, holding that a chargor's complaint about disputed account transactions, absent a defeasibility or Form 16D-service ground, does not defeat an order for sale.

This High Court decision at Shah Alam concerns a chargee bank's application, by originating summons, for an order for sale of charged land 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 bank as security for a housing loan and an overdraft facility; the housing loan had been settled, and the proceedings arose from the outstanding sum under the overdraft account. The distinctive feature of the case was the defendant's defence that nineteen withdrawal transactions or fund transfers from the overdraft account on a single day in December 2019 had been unauthorised.

The governing question on an order-for-sale application is whether the chargor has shown "cause to the contrary" within the meaning of section 256(3) of the National Land Code, which is the recognised threshold for resisting the statutory remedy. The court restated the established categories of cause to the contrary: a chargor may show that the charge is defeasible by bringing the case within one of the exceptions to indefeasibility in section 340 of the Code; may demonstrate that the chargee has failed to meet a condition precedent to the application, such as proving a demand or the service of a notice in Form 16D, or that the notice demands a sum not lawfully due; or may show that the grant of an order for sale would be contrary to some rule of law or equity.

Measuring the defendant's opposition against those categories, the court found that he was not resisting on the ground that the charge was defeasible under section 340, and had not raised any issue about the service of the Form 16D notice. His complaint about the disputed overdraft transactions did not, without more, establish cause to the contrary against the order for sale. The court accordingly made the order sought and ordered the defendant to pay costs of RM5,000 to the plaintiff. The judgment is a useful application of the cause-to-the-contrary threshold in section 256(3) of the National Land Code to an order-for-sale application.