HONG LEONG ISLAMIC BANK BERHAD v SONATA CREST SDN BHD PENCELAH MEGAFEST SDN. BHD. PIHAK TERKILAN MAPLE TRICOT INDUSTRIES SDN BHD

Case Significance

Illustrates the difficulty of intervening in a foreclosure once the order for sale has been perfected: without a sufficient proprietary right, the lodgment of caveats or a pending appeal in a separate recovery suit will not justify halting a court-ordered judicial sale, reinforcing the finality of a perfected order for sale.

This High Court decision at Muar concerns applications to intervene in foreclosure proceedings after the order for sale had already been perfected. The plaintiff, an Islamic bank, had commenced foreclosure under section 256 of the National Land Code and Order 83 of the Rules of Court 2012 in respect of a charged property in the Batu Pahat district of Johor. A company then in liquidation sought, by two applications, to intervene in the proceedings and to stay the auction and the completion of the judicial sale, pending the disposal of its appeal to the Court of Appeal against the dismissal of a separate civil suit by which it had tried to recover the property. The questions for the court were whether the proposed intervener had a proprietary right sufficient to warrant intervention, whether its lodgment of private caveats amounted to adequate notice of its pending claim, whether the court was functus officio once the order for sale had been drawn up and perfected, and whether the proper course for the proposed intervener was to file a fresh action rather than to intervene. Having considered the applications on their merits, the court found no merit in them and dismissed both applications to intervene with costs. Delivered by Suria Kumar Durairaj Johnson Paul J, the judgment is a useful illustration of the difficulty of intervening in a foreclosure once the order for sale has been perfected: a party asserting a competing interest in the charged land must ordinarily assert it through the appropriate proceedings, and the mere lodgment of caveats or the pendency of an appeal in a separate recovery suit will not, without a sufficient proprietary right, justify halting a judicial sale that the court has already ordered. The decision reinforces the finality that attaches to a perfected order for sale in the foreclosure process.