KNIGHT CAPITAL SDN BHD v RAUB RESOURCES SDN. BHD.

Case Significance

Illustrates a lien-holder’s remedy of an order for sale under section 256 of the National Land Code where no cause to the contrary is shown, and that a case-code mislabelling causing no prejudice does not defeat the application.

This High Court decision at Temerloh determines an application by a lien-holder for an order for the sale of charged land under section 256 of the National Land Code. The plaintiff had extended a secured loan of RM600,000 to the defendant company at twelve per cent interest with monthly instalments, guaranteed by two guarantors, and, on the strength of a letter of acknowledgment by the borrower authorising it, had entered and registered a lien-holder’s caveat — a "kaveat pemegang lien" (lien-holder’s caveat) — over the borrower’s land, the borrower having delivered the original document of title to the plaintiff. The lien-holder’s caveat was registered at the land office, and the loan itself was additionally guaranteed by two guarantors. When the borrower defaulted, the plaintiff obtained judgment and then applied for an order for sale to realise its security. Under section 256(3) the Court must make an order for sale unless the defendant shows cause to the contrary. The defendant raised two points. It contended that the arrangement offended the moneylending legislation, but the Court held that the twelve per cent rate did not contravene the Moneylenders Act 1951 and, in any event, that this was not the true issue, the real question being whether an order for sale should be made absent any cause to the contrary. The defendant also argued that the originating process had been filed under the wrong case code — as a charge matter rather than a lien matter — rendering it irregular, but the Court held that the mislabelling caused it no prejudice, since the affidavits of both parties plainly addressed the facts of a lien, and it did not mislead the Court. Finding no cause to the contrary, the Court, per Roslan bin Mat Nor J, allowed the order for sale sought by the plaintiff. The judgment illustrates the lien-holder’s remedy of sale under section 256 and the treatment of a case-code irregularity.