LIMRA FIDEM SDN BHD v E-HONG HOLDINGS SDN BHD

Case Significance

Illustrates the "cause to the contrary" inquiry under section 256(3) of the National Land Code 1965 on an order-for-sale application, and how compliance with the Moneylenders Act 1951 bears on the enforceability of a charge securing a moneylending loan.

This High Court decision at Shah Alam concerns an application by a licensed moneylender for an order for sale of charged land. The plaintiff, Limra Fidem Sdn Bhd, a moneylender licensed under the Moneylenders Act 1951, had lent the defendant, E-Hong Holdings Sdn Bhd, a sum of some RM46 million under a moneylending agreement dated 9 November 2022, secured by a charge over the defendant's land in Mukim Semenyih, Ulu Langat, Selangor. On the defendant's default the plaintiff applied by originating summons under sections 256 and 257 of the National Land Code 1965 and Order 83 of the Rules of Court 2012 for the land to be sold by public auction to satisfy the sum due under the charge. The defendant resisted on several grounds said to constitute "cause to the contrary" under section 256(3): that the originating summons was premature under section 254(1) of the National Land Code, that the statutory notice in Form 16D was defective, and that the moneylending agreement was void for non-compliance with the Moneylenders Act 1951. The court examined each objection, including the requirements as to the contents of a moneylending statement under section 19 and the First Schedule to the Moneylenders Act 1951, namely the date of the loan, the principal, the rate of interest, sums already paid and sums due and unpaid. Satisfied that no cause to the contrary had been shown, the court allowed the originating summons and ordered the sale, fixing costs at RM10,000. The court's approach shows that a borrower resisting an order for sale must point to a genuine legal impediment going to the charge or the debt, and that technical or premature-filing objections will not amount to cause to the contrary where the statutory requirements have in fact been met. The judgment illustrates the "cause to the contrary" inquiry on an order-for-sale application and the way compliance with the Moneylenders Act 1951 bears on the enforceability of a charge securing a moneylending loan.