Public Auction Derailed by Movement Control Order?
20 November 2020
The High Court in the recent case of Ho Kean Pin v Malayan Banking Berhad & Anor  MLJU 1435 ruled that the inherent jurisdiction of the Court cannot be invoked in favour of a successful bidder of a land purchased at a public auction to extend the timeline for payment of the purchase price as a result of the Movement Control Order (“MCO”), without first ensuring that the Chargor’s interest is not in any way jeopardised by the same.
The Plaintiff was the successful bidder at a public auction held on 7.1.2020, whereby he had duly paid the deposit of 10% out of the reserve price prior to the auction and had thereafter successfully secured a loan from a Bank on 21.1.2020 for the purpose of paying the balance purchase price. Pursuant to Clause 16 of the Conditions for Sale (attached to the Proclamation of Sale) and Section 257(1)(g) of the National Land Code 1965, the Plaintiff was to settle the payment of the balance purchase price in 120 days from 7.1.2020, which in this case was 6.5.2020.
The main contention by the Plaintiff was that during the MCO, the Penang Land Office, law firms and other relevant bodies were not allowed to operate from 18.3.2020 to 4.5.2020, which hindered the Plaintiff from lodging a private caveat on the Property as required by the Bank for the release of the loan. The Plaintiff averred that the extension of time applied for was merely to substitute the 50 days lost as a result of the MCO. In addition, the fact that the Plaintiff had obtained a loan was proof that he was genuine in completing the purchase, but for the imposition of the MCO, he could not do so.
The 1st Defendant which was the Chargee Bank, left it to the discretion of the Court, albeit with certain conditions, whether or not to grant the extension, but highlighted that the 120 days provided under Section 257(1)(g) was a mandatory stipulation due to the word ‘shall’ used therein in that “... there shall be no extension of the period so specified”. Meanwhile, the 2nd Defendants who were the Chargors of the Property, did not file any affidavit nor participate in the proceedings. There was no evidence that the cause papers were served on them.
Findings and Decision
The Court dismissed the Plaintiff’s application.
The learned JC was with the Plaintiff on the point that based on the circumstances of the case and in the interest of justice, it was fit and proper for the Court to invoke its inherent jurisdiction to allow the extension by adopting the approach taken in Hee Nyuk Fook v Public Prosecutor 2 MLJ 360and Sundarajan a/l Sokalingam v. Fredrick Indran a/l XA Nicholas o/b Perak Bar Committee (Malaysian Bar Council, intervener) 8 MLJ 203 in interpreting Section 257(1)(g). Although the word ‘shall’ when used in a statute prima facie generally is taken as mandatory, it does not necessarily mean to be so in every case.
However upon considering the true intention of the Parliament behind the inclusion of the said provision in the National Land Code, the Court held that it was crucial that the Chargors be afforded a chance to be heard before the case was determined. Since the 2nd Defendants were not present during the hearing and in the absence of an affidavit of service, the Court was not satisfied that the Chargors had not been deprived of their right to be heard and would not be prejudiced if the Plaintiff’s application was allowed, hence the dismissal of the application.
This case is significant as it involved a case whereby a successful bidder in a public auction had been prevented from completing the sale as a result of the MCO.. Although the application was eventually dismissed, it is worth noting that the Court acknowledged that the successful bidder landed in the predicament due to the imposition of the MCO through no fault of his own, therefore it would be unjust for him to have to bear the brunt of being deprived of his right to complete the transaction.
It appears that had it not been for the absence of proof of service of the cause papers on the Chargors, the Court would have been inclined to allow an extension of time to complete the sale transaction on the ground that inability to complete was due to the MCO.
For enquiries, please contact the following:
Oon Hooi Lin, Partner
Lee Ai Hsian, Partner
Theresa Chong, Consultant
Lim Koon Huan, Partner
Claudia Cheah, Partner
Ratha Govindasamy, Partner
Shaleni Sangaran, Partner