Pertubuhan Keselamatan Sosial (PERKESO) v LANGKASUKA LAND SDN BHD

Case Significance

Illustrates the cause-to-the-contrary threshold under Low Lee Lian v Ban Hin Lee Bank Bhd that a chargor must meet to resist a statutory order for sale under sections 256 and 257 of the National Land Code, holding that a bare denial of service and personal contractual grievances do not impeach a registered charge.

This High Court decision concerns two applications for an order for sale of charged land under sections 256 and 257 of the National Land Code, and what a chargor must show to resist foreclosure. The plaintiff, a statutory body acting as chargee, sought orders for sale over two adjacent properties in Langkawi, each secured by a separate registered charge in its favour; the two applications, arising from substantially identical facts, were heard together by consent. The chargor resisted on two broad grounds: that there had been non-compliance with the statutory notice requirements under section 254 of the Code, and that equitable considerations, said to arise from a put-and-call option agreement, a supplemental agreement and a memorandum of understanding, rendered the exercise of the chargee's power of sale unconscionable. The court applied the settled principle that, once a charge is registered, the chargee has a statutory remedy by way of an order for sale, and that the chargor must raise a cause to the contrary within the meaning of the authorities, in particular Low Lee Lian v Ban Hin Lee Bank Bhd, to defeat the application. It held that the chargor's objections did not amount to a cause to the contrary: the complaint of defective service was met by the registered-post slips evidencing service, against which the chargor offered only a bare denial, and the matters said to make the sale unconscionable were essentially contractual and personal in nature and did not impeach the registered charge, which is an action in rem. Satisfied that no cause to the contrary had been shown, the court granted the orders for sale, fixing the terms of the public auction, including the reserve, the 120-day period for payment of the balance and the consequences of default under section 267A. The judgment is a useful illustration of the cause-to-the-contrary threshold a chargor must meet to resist a statutory order for sale.