GRAND DYNAMIC BUILDERS SDN. BHD. v PARADISE CITY SDN. BHD.

Case Significance

Confirms that interim preservation of property under Order 29 rule 2(1) is unavailable to an applicant with no subsisting right in the land, and that an unfulfilled condition precedent in a security arrangement defeats a claim to restrain dealings with the property.

This High Court decision in Kuala Lumpur concerns an application for the interim preservation of property, and whether such relief can be granted where the applicant's asserted security over the land never came into existence. The plaintiff applied under Order 29 rule 2(1) and Order 92 rule 4 of the Rules of Court 2012, section 25 read with the Sixth Schedule to the Courts of Judicature Act 1964, and section 51(1) of the Specific Relief Act 1950, for an interim order to prevent the defendant from dealing with a parcel of land registered in the defendant's name, and with any proceeds from its sale, including under the foreclosure provisions of the National Land Code that a chargee bank might invoke. The plaintiff's claimed interest rested on an arrangement under which it said it was to secure the land as security for a loan it had extended. The Court examined whether the plaintiff had established a sufficient underlying right to justify the preservation order. It concluded that there was in fact no agreement at all between the plaintiff and the defendant, and that a condition precedent contained in the relevant charge annexure had not been fulfilled — a condition that had to be satisfied before the plaintiff could secure the land as security for its loan. Because the foundation for the asserted interest was absent, there was no basis on which to preserve the property in the plaintiff's favour. The Court accordingly dismissed the application with costs. The decision illustrates that interim preservation of property is not available to an applicant who cannot show a subsisting right or interest in the property, and that an unfulfilled condition precedent in a security arrangement may be fatal to a claim to restrain dealings with the land. The decision also reflects that the various procedural sources the plaintiff invoked — the preservation power, the inherent jurisdiction and the Specific Relief Act 1950 — all presuppose that the applicant has some legitimate interest capable of protection, and none of them can manufacture a right to restrain dealings with land in which the applicant, on analysis, holds no completed security or proprietary stake.