Lecture Notes, Charge, Land Law 2 Hi, to those who decide to rely on these notes.

Please note that they were made in early 2009, so updates are required. I edited them and personalized them, but the core was still from the lecture notes, so much credit is to be given to the lecture notes. It may not be adequate, there were still some extra cases on my printed copy. p.s. this is based on Malaysian law. 4.1 Definition - Charge Definition Sec 5 NLC: A charge is a registered charge. Types of charge Differences between charge and mortgage. Mahadevan s/o Mahallingam v Manilal & Sons (M) Sdn Bhd [1984] 1 MLJ 266 at 270 Our land law does not recognize a mortgage if it means a mortgage in the sense of English land law whereby the legal estate, i.e. ownership of the land is transferred to the mortgagee and what is left with the mortgagor is only an equitable right to redeem, known as equity of redemption. But our land law certainly recognizes a mortgage in the sense of Torrens system, whereby the mortgagor retains the legal ownership whilst the mortgagee acquires a statutory right to enforce his security. For the purpose of avoiding confusion, our National Land Code drops the word "mortgage" and uses the word "charge" in place of Torrens mortgage. Malayan United Finance Bhd v Tan Lay Soon [1991] 1 MLJ 504 This case basically says that equity of redemption in English and equity of redemption under the law of New South Wales, Australia which is closely similar to Malaysia are no equal. Interest in land Ho Giok Chay v Nik Aishah [1961] MLJ 49 Here the land was a Malay reserve land and was charged by the Kelantan Land Enactment. However, by the Malay Reservations Enactment, the vesting of interest in a Malay reserve land cannot by transfer or transmission the interest be vested in a non

Malay. The chargee was non-Malay. The order for sale by public auction was dismissed and summons dismissed. T Bariam Singh v Pegawai Pentadbir Pesaka, Malaysia [1983] 1 MLJ 232 His Lordship said that a charge does not amount to interest in land because the charge is not gven any interest as to the enjoyment of the use of land. Also, he said that it was not the intention of the enactment to create charges in favour of non-Malays in the event of default as the land can never be sold to a non-Malay. The case of Ho Giok Chay which charge was registered under the Kelantan Land Enactment 1938 no longer applicable as it had been repealed by the NLC and now a chargee can enforce a sale on the land. Malaysia Building Society Bhd v Johore Mining And Stevedoring Company Sdn Bhd [2004] 5 CLJ 82 I: D1 PA to D2 to obtain loan and subdivide land. D2 obtain loan from P but IDT in LO for subdivision so charge not registered. Substituted PA made from D2 to P. Undertaking between made between D2 and P that charge to be made once subdivision complete. D2 got RM 20million and defaulted on repayment. D1 revoked 1st PA and refused to execute charges. P aggrieved and applied for declaration for charge entitlement of subdivided land. H: At the time the Substituted Power of Attorney was executed, the second defendant was the first defendants lawful attorney. Hence, the assignment of the legal propriety interest in the parent land and the power to sell and enter possession into the 1019 parcels in the event of default was in fact granted to the plaintiff by the first defendant through its attorney, the second defendant. Consequently, the plaintiff had a proprietary interest in the 1091 IDTs. That proprietary interest is more in the nature of a right in rem taking the form of an equitable charge. (a) What can be charged: s 241 Sec 241(1): Powers of charging (a) the whole, but not a part only, of any alienated land; (b) the whole, but not a part only, of any undivided share in alienated land; and

(c) any lease of alienated land, may be charged under this Act with(aa) the repayment of any debt, or the payment of any sum other than a debt; or (bb) the payment of any annuity or other periodic sum. Sec 241(2): The powers conferred by sub-section (1) shall include power to create second and subsequent charges. Sec 241(3): Restrictions The said powers shall be exercisable in any particular case subject to(a) any prohibition or limitation imposed by this Act or any other written law for the time being in force; (b) any restriction in interest to which the land in question is for the time being subject; and (c) in relation to leases, the provision thereof, express or implied. Phuman Singh v Khoo Kwang Chong Any charge created in contradiction with stipulated restrictions and requirements will be void ab ibnitio & held unenforceable. Sec 241(4): Without prejudice to paragraph (a) of sub-section (3), no charge may be granted to two or more persons or bodies otherwise than as trustees or representatives. Sec 244(1): Chargee can be entitled to the IDT (or in cases, the duplicate lease), in the event there is still liability in the charge. Types of land which can be charged: Sec 247: Postponement of priority of a charge to a subsequent charge can be made by Form 16C. Sec 245: Restriction on consolidation.

Sec 246: Tacking on further advances.

(b) Ways of creating a charge Form 16A; or Form 16B Form 16A: for a charge to secure the repayment of a debt or the payment of any sum other than a debt. Form 16B: charges providing for payment of an annuity or other periodic sum (plus required stamping) Subject to Sec 241(3) & (4) What if you use the wrong form? V Letchumanan v Central Malaysian Finance Berhad [1980] 2 MLJ 96 I: The loan was to be paid in installments until request made. On default, chargee sought to sell the land, chargor objected on basis that Form 16A should have been registered. H: FC held that 16A was correct as the statutory form is flexible enough. (it was not to deviate or mislead, hence correct by virtue of the Interpretation Act) Tan Yen Yee v Equity Finance Corp Bhd [1991] 1 MLJ 237 Instrument used should be appropriate but by the Interpretation Act, any instrument shall not be invalidated by reason of any deviation that has no substantial effect and that is not calculated to mislead. (c) Creation of second charge and subsequent charges Sec 241(2): The powers conferred by sub-section (1) shall include power to create second and subsequent charges.

Priorities to first registered charge Sec 244(2): A chargee having the custody of any issue document of title or duplicate lease shall, on the written request of the proprietor or lessee, and within such reasonable period as is specified in the request, produce the same at any Registry or Land Office so specified for any purpose for which it is required under any provision of this Act. 2. Effect of a Registered Charge

Sec 243: registration is mandatory and not a choice. R & I Securities v Golden Castle Finance [1979] 1 MLJ 46 at 47. I: Request and consent from first chargee required before second charge or any further security or encumbrance could be executed over the land could be entered as in Clause 6 of the loan agreement. Applicant was requesting for an extension of caveat on the said land of the registered proprietor. The first chargee was not in agreement. H: The registered proprietors had by Clause 6 of the first charge at their own instance disabled themselves from creating further charges without consent of the first chargee. The applicants were aware of the restrictions and in the circumstances the application must be dismissed. Rights of the parties Implied Sec 249: Compliance with the sum secured for and interest and payment of any sum due to the State Authority or lessee (if relevant) and perform in compliance to the conditions the land is subject to. Sec 250: Agreement by chargor implied in absence of contrary intention: repair and keep all buildings, insure it to full value against loss or damage by fire, permit chargees agent to inspect upon notice, if failing, remedy may be taken.

Sec 251: Implied agreement by chargee as to consent to leases, etc: implied agreement on chargee that consent to grant lease or tenancy is not be withheld without reasonable cause. Express agreement of parties. Sec 218(2): Transfer of charge by the act by Form 14B Sec 215: Form, and effect generally, of transfer of land: title to vest in the transferee. Sec 216: Additional provisions with respect to lands transferred subject to leases, charges, etc: interests on land will continue etc. Sec 244: Custody of IDT/Duplicate lease: Who keeps? 4.3 Effect of an Unregistered Charge Equitable Charge Void Southern Bank Bhd v Chuah Beng Hock [1999] 5 MLJ 206 Charge created under Code only takes effect upon registration, no charge effective unless registered. Equitable charge Chuah Eng Khong v Malayan Banking Bhd [1998] 3 MLJ 97 Equitable mortgage (charge) still can exist in the presence of the Code. NLC did not include what Selangor Registration of Title Regulations 1891, Sec 4 which voided equitable mortgages. RRM Arunasalam Chetty s/o Sithambaram Chetty v Teh Ah Poh trading under the style of Mun Seng Hin Kee & Anor [1937] MLJ 317 Expression of equitable mortgage -> Act of securing by deposit of title for a loan agreement, however you dont get a protection on par with the NLC, but the equitable charge bring an equitable favor to the creditor. Mahadevan s/o Mahallingam v Manilal & Sons (M) Sdn Bhd [1984] 1 MLJ 266

H: an agreement to secure a debt by land create equitable charge, give rise to equitable right though not registered under NLC, so the remedy cant be granted as per the NLC. If failed to register, lender may be able to seek recognition Effects Tan See Hock v Development and Commercial Bank Bhd [1993] 3 MLJ 250 I: P and 4 other landowners entered into agreement with Bantar Sdn Bhd whereby P agreed to transfer land to B as trustee for development. Bantar charged the said land to the D1 (1st Charge) to secure financial facility. Subdivision was approved and Bantar was the new registered proprietor without any encumbrances such as the first legal charge of the first defendant thereon. P and D1 lodged respective caveats on the land. The development was not carried out and B failed to repay the loan granted by D1. The registrar of titles gave notice of Form 19C, to P by D1s request of the registrar's intention to remove the P caveats under s 326 of the NLC unless extended by an order of the court. The plaintiff applied to extend the private caveats lodged by him on the said land, contending that he had established an interest in the land and that there was a serious question to be tried with regard to the ownership of the land. The plaintiff also asserted that Form 19C, which was issued by the registrar of titles, was invalid as it was ultra vires. H: Ps application allowed. (1) Land had been freed and discharged from all titles upon re-alienation. This extinguished interest of D1 with the initial first legal charge. (2) Sec 340(1) NLC confers indefeasible title or interest to proprietor where at that time charge lease or easement is being registered under. It does not recognize the interest of a chargee which has not be registered. D1 was not a registered chargee, they could not avail themselves of the indefeasibility of their interest in the said land. (3) D1 was not registered chargee, hence no rights to proceed with Sec 326 of NLC. Therefore, the notice by Form 19C of the NLC was ultra vires. Any other category of persons aggrieved should seek relief by way of s 327 of the NLC. Oriental Bank v Chup Seng Restaurant (Butterworth) Sdn Bhd [1990] 3 MLJ 493 (rights not by the NLC)

I: The crucial issue was whether the plaintiffs who stepped into the shoes of Citibank NA by subrogation, can obtain an order for sale under s 256 of the National Land Code 1965 despite not being the registered chargee of the said property. H: Though all the documents had been executed and ready for registration (P was now an equitable chargee), the National Land Code 1965 clearly requires the charge to be registered in its prescribed form before a chargee can enforce his right of foreclosure under the Code though does not prohibit the creation of an equitable charge. Mahadevan s/o Mahallingam v Manilal & Sons (M) Sdn Bhd [1984] 1 MLJ 266 FC [Note: PC did not express any view on the status of the equitable charge in the Malaysian Torrens system.] (page1) Equitable charge used in the following circumstances: a. where a charge instrument has been executed but not presented for registration Standard Chartered Bank v Yap Sing Yoke [1989] 2 MLJ 49 I: The charge registered had not been affected as they had been returned due to inadequate documents supplied. There had been no registration as the P did not know of its return. There now was a private caveat lodged on land, so does it have priority. H: P had acquired a title in equity over the land because the IDT was in the custody of P at all times, it had created a lien in equity over the said land. The equitable interest is not affect by absence of a caveat. Oriental Bank v Chup Seng Restaurant (Butterworth) Sdn Bhd [1990] 3 MLJ 493 b. where no separate title has been issued and, instead of a charge, a loan agreement and a deed of assignment are entered into to secure a loan Malayan Banking Bhd v Zahari bin Ahmad [1988] 2 MLJ 135 I: The D owed the P a certain amount of money. Pursuant to the loan, a loan agreement and a deed of assignment were executed, and the D defaulted on the repayment of the loan. P applied for court order that they be at liberty to issue write of possession, and for

an order that they may sell and proceeds go to the repayment and interest owing to them. H: NLC did not prohibit creation of equitable charges, its recognizable, hence the loan agreement and deed of assignment created an equitable charge in form and substance. Southern Bank Bhd v Chuah Beng Hock [1999] 5 MLJ 206 Failed to register 2nd charge for the overdraft facility, but still disbursed $ 700,000. Order for sale applied for upon default of payment, so the court said that Sec 243 charges by NLC require registration. If above $ 1,800,000 wished to be recovered from the $ 2.5mil, then they have to obtain from other sources (I.e. judgment debt). Court did not allow application for order for sale as there was cause to contrary. Mastiara Sdn Bhd v Motorcycle Industries (M) Sdn Bhd [1998] 3 CLJ 874; [1999] 1 AMR 362 Chuah Eng Khong v MBB [1998] 3 MLJ 97; [1999] 2 CLJ 917 Phileo Allied Bank (M) Bhd v Bupinder Singh a/l Avatar Singh [1999] 3 MLJ 157 4.4 Default and Remedies Real right and personal right for chargee:

Order for sale Taking possession of land Appointing receiver (if chargor is a corporation)

1.

Order for sale

Sec 253: Remedies of Chargee: Sale (purpose and scope of the chapter) enables the chargee to obtain the order for sale by public auction the sale of the land or lease to which his charge relates in the event if theres a breach. Sec 254: Service of default notice, and effect thereof. One month or alternative period (as specified in charge). Notice in Form 16D specifying the required info and warning of order for sale.

Sec 255: Special provision with respect to sums payable on demand: Form 16E, related to monthly repayment. Sec 256: Application to Court for Order for sale. Sec 257: Matters to be dealt with by order for sale: Form 16H: information required (please read). Sec 258: Procedure prior to sale: notice, advertisement, conditions of sale, IDT deposition etc. Sec 259: Procedure at sale (please read) Sec 260: Application to Land Administrator for order for sale. Sec 261: Land Administrator to hold enquiry. Sec 262: Provisions as to enquiry. Sec 263: Order for sale, and matters to be dealt with thereby. Sec 264: Procedure prior to sale. Sec 264A: Postponement or cancellation of an order for sale by Land Administrator. Sec 265: Procedure at sale. Sec 266: Right of chargor to tender payment at any time before sale. Sec 266A: Statement of payment due. Sec 267: Effects of sale. Sec 267A: Application of deposit upon failure to settle purchase price etc.. Sec 268: Application of purchase money. Sec 268A: Application of purchase money by chargee who is a financial institution. Sec 269: Protection of purchasers. Form 16D & 16 E: Two sets of procedures for the chargee to enforce his remedy by way of sale on the ground of the chargors default depending on the type of title.

RT: Sec 256, Order 83 RHC High Court. LOT: Sec 260 Land Administrator. 4.4.2 Taking possession of land Sec 270: Limitation of powers to certain lands, and to first chargees only. Sec 271: Power of chargee to take possession on any default by chargor. Sec 272: Procedure for taking possession, Form 16J, Form 16K. Court order. Sec 273: Duration of right to possession. As long as liability continues. Sec 274: Position of chargee in possession profits from land and rent etc. Sec 275: Power of chargee in possession to grant leases and accept surrenders. Sec 276: Provisions as to notices by chargees to receive rents. Sec 277: Application of rents and profits by chargees in possession. Sec 270(1)&(2): To registrar title, and to first chargees, only Sec 271(1)(a): Power of chargee to take possession on any default by charger Malaysia Credit Finance Bhd v Yap Hock Choon [1989] 2 MLJ 363 The learned judge said that it seemed that Sec 271 and 272 seemed to unmistakably give a right to the chargee to oust the chargors from their possession of the charged land. Right to possession The chargee has been conferred with power to take possession of land subject to lease or tenancy on default by chargor. However Sec 270(1)(aa) seems to have restricted this from subject matters that involve an undivided share in the land. Procedure for taking possession Form 16J Serve notice on lessee or tenant and a copy on chargor where he will collecting rental from the rent to the chargor under any lease or tenancy. This will lead the rights of the chargor to be passed to the chargee.

Form 16K Serve this when chargor wishes to go into occupation. If within a chargor on whom a notice in Form 16K is served fails within the period specified in that behalf in the notice to admit or secure the admission of the chargee into occupation of the land, chargee can apply for a court order. Duration of right to possession A chargee can remain in possession until the loan remains unpaid. A chargee in possession by his rights in Sec 275 has right to lease the land or obtain the rent payable under the lease. Form 16J pursuant to Sec 272(2) or Sec 275(7) of NLC shall be in force and bind the lessee or tenant on whom it is served and any subsequent transferee of the lease or tenancy in question, until it is withdrawn by the chargee or cancelled by the chargor or by the purchaser of the land. Cancellation of notice of possession must be made by serving on the existing lessee or tenant with a notice in Form 16L or 16M. Effects of taking possession Chargee can take all the profits accrued from the land. But chargee is liable to the chargee is liable to the chargor for any act whereby the capital value of the land is impaired or the chargor is otherwise put to other loss. Article: Challenges to Charges: Principle and Precedent, RR Sethu [1993] 3 MLJ xc 4.4.3 Appointing receiver No provision in NLC. Only happens when the chargor is a company registered under Companies Act 1965 which land is charged to the financial institutions as security for loans granted to them. Such right arises out of contract and not by virtue of the statutory powers conferred by NLC. 4.5 Order for Sale Kimlin Housing Development Sdn Bhd (appointed receiver and manager (In liquidation) v Bank Bumiputra [1997] 2 MLJ 805. Not a judgment debt. Order for sale is not a judgment or decree: Kandiah Peter v Public Bank Bhd [1994] 1 MLJ 119. 4.5.1 Notice of Demand

(a) Form of notice: Form 16D or 16E There are two types on notices prescribed by the Code: Notice of default (16D) or Notice of demand (16E). Form 16D: served to defaulter to notify intention to commence proceedings for sale as in the NLC in respect of any breach of the terms of the charge (including failure to pay the money as agreed. A duration of one month (or agreed duration) is given to correct the breach, if not; there will be application for sale by public auction. Court will examine stipulated time to determine if the notice in 16D was given prematurely. Court can also give an alternative minimum period which is not less than what stated in 16D Form 16E: issued n respect of a debt where the principal sum is payable on demand whereby the condition is that the payment will have to be made within a month from service or order for sales will be applied, the duration under 16E cannot be reduced by chargee Syarikat Kewangan Melayu Raya v Malayan Banking Berhad [1986] 2 MLJ 253 When two charges are lumped together in a notice of Form 16D, the court held it was not defective because it did not prejudice or mislead. Whether the SD was defective in respect of its contents is a question of fact. Jacob v Overseas Chinese Banking Corp, Ipoh [1974] 2 MLJ 161 FC Issue 1: The chargee had used Form 16D when the principal sum was payable on demand within Sec 255. The chargee had not made demand by Form 16E and the chargor argued that it was the usage of the wrong instrument as the letter sent by the chargee had been worded that it the payment was not made, no alternative but to recover the overdraft from you. Sec 255 (1) does states chargee shall make demand by Sec 16E and not compels the chargee to in the event of recovery of principal sum. It seems that if the chargee had made a demand using Form 16E, he did not need to use Form 16D; and if he did not use Form 16E, it would be okay to use Form 16D. The main concern of the legislature is for there to be sufficient notice given to the chargor before coming to court. Issue 2: Principal and interest would be mean for Form 16D, and principal would be for Form 16E, is this argumentation true? The learned judge said that this is not true, as

neither Sec 254 nor Sec 255 used the word interest, so interest could be claimed by either form. Sec 62 of the Interpretation Act too states that in the event of deviation from forms, the form shall not be invalidated if it does not have substantial effect to mislead. The judge sees that there is no reason why the word and interest cannot be added to the heading of Form 16E. OCBC Bank (M) Bhd v Lean Seng Pottery Factory Sdn Bhd [1999] 2 MLJ 402. Central Malaysian Finance Bhd v Great Pacific Development Sdn Bhd [1983] 1 CLJ 134 Malayan United Finance Bhd v Tan Ah Moi @ Tan Nyor Pong (F) & Satu Lagi [1933] 2 CLJ 427 Co-operative Central Bank Ltd v Mengkuang Properties Bhd [1991] 2 MLJ 283 Notice of demand of payment which does not specify the precise sum owing is not invalid if the chargor is given a reasonable opportunity to comply with the notice by the chargee. Invalidation only of the precise sum is mistaken. VAM Hussain v BP Malaysia [1970] 2 MLJ 69 It was held that the proper notice to issue where the principal sum secured by a charge is payable on demand should be in Form 16E. It was also held that inclusion of interest in Form 16E did not make the notice defective. Malayan Banking Bhd v PK Rajamani [1994] 1 MLJ 405 Perwira Affin Bank Bhd (formerly known as Perwira Habib Bank Malaysia bhd) v WT Low & Ng Realty Sdn Bhd [1997] 5 MLJ 185 Citibank NA v Wong Ngai Poh [1983] MIMB v Dhanoa Sdn Bhd [1988] 1 MLJ 257 Citibank Bhd v Mohamad Khalid Farzalur Rahaman & Ors [2000] 3 CLJ 739 Kekatong Sdn Bhd v BBMB [1998] 2 MLJ 440. Khor Kim Yong v Public Bank Bhd & Anor [1998] 1 CLJ 668. Cempaka Finance Bhd v Abbas bin Yaakob [1999] 2 MLJ 411.

Multipurpose Bank Bhd v Maimoon Bte Abdul Razak [1999] 6 MLJ 215. Bank Kerajaan Rakyat Malaysia Bhd v Emcee Corporation Sdn Bhd [2003] 2 MLJ 408 Lee Gee Pheng v RHB Bank Bhd [2003] 4 CLJ 639; [2004] 1 MLJ 618 Alliance Bank Malaysia Bhd v MCK Development Sdn Bhd [2005] 5 CLJ 77 The Hong Kong & Shanghai Banking Corpn Ltd v Tan Sock Gin [1999] 7 CLJ 450. c. Contents of Notice of Demand Sec 254(1)(a) & (b): Specifying breach in question, requiring it to be remedies within one month or any other alternative period with warning if notice not complied with, proceedings to obtain an order for sale will be taken. Sec 254(2): After the service of notice, the charge land is vested in any other person or body, the notice is valid unto the person as though it was served against to. Sec 245(3): What happens if breach occurs? Whole some charge will be payable to the chargee. Syarikat Kewangan Melayu Raya Bhd v Malayan Banking Bhd [1984] 1 MLJ 115 FC When two charges are lumped together in a notice of Form 16D, the court held it was not defective because it did not prejudice or mislead. Whether the SD was defective in respect of its contents is a question of fact. Co-operative Central Bank Ltd v Meng Kuang Properties Bhd [1991] 2 MLJ 283. A notice of demand which does not state the precise sum owing is not invalid if the chargor is given a reasonable opportunity to comply with the notice and if the notice does not demand payment of something to which the chargee is not entitled. Here, the plaintiff bank was found to not be prima facie entitled to the remedies sought by them in the originating summons, hence the matter had to go to trial. Standard Chartered Bank Malaysia Bhd v Tunku Mudzaffar Bin Tunku Mustapha [2005] 1 MLJ 604

Service of notice is mandatory Powers and requirements for issuing of notices are provided under s 254 & 255 NLC Issue 1: is one month period a mandatory? Sec 254(1) allows one month or otherwise agreed. Mohamad Khalid b Farzular Rahaman & Ors v Citibank Bhd [2000] 5 MLJ 421 can be shorter than one month. Issue 2: Will service of wrong notice be a bar to the chargees application for order for sale? Jacob v Oversea Chinese Banking Corp (FC). Accepted by OCBC Bank (M) Bhd v Hotel Rasa Sayang Sdn Bhd [2005] 7 MLJ 301. Issue 3: whether the chargee can impose other charges (not provided in the charge agreement)? Co-operative Central Bank Ltd v Meng Kuang Properties Bhd [1991] 2 MLJ 283 not prima facie entitled. Illegality Tan Ah Tong v Perwira Affin Bank Bhd & Ors [2002] 5 MLJ 49 Malayan Banking Bhd v PK Rajamani & Anor [2004] 3 CLJ 79 Perwira Affin Bank v Tan Ah Tong [2003] 5 MLJ 193 4.5.2 Powers of Court Registry title Sec 256 NLC; Order 83 RHC Sec 257: Matters decided by the court, Form 16H Sec 258-259: Procedure at sale. Order 83 Rules of the High Court 1980: Non compliance will cause the case to be struck off.

Citibank NA v Ibrahim bin Othman [1994] 1 MLJ 608 Bank Pertanian Malaysia v Zainal Abidin bin Kassim & Anor [1959] 2 MLJ 537 Phileo Allied Bank (Malaysia) Bhd v Bupinder Singh Avatar Singh & Anor [2002] 2 CLJ 621 Chang Keat Realty Sdn Bhd v Ban Hin Lee Bank Bhd [2003] 3 CLJ 532 a. Circumstances where the order for sale is not granted

S 256: cause to the contrary. Low Lee Lian v Ban Hin Lee Bank Bhd [1997] 1 MLJ 77 Gopal Sri Ram CAJ has stated that if cause to contrary could be established by the charger, it would defeat the application for order of sale. The case divided cause to contrary into three parts that were: (i) when chargor brings any exception to indefeasibility; (ii) when chargor could demonstrate that the chargee failed to meet conditions precedent to making the application; and (iii) when a chargor could demonstrate that the grant of an order for sale would be contrary to some rule of law or equity. Keng Soon Finance Bhd v MK Retnam Holdings Sdn Bhd & Anor [1989] 1 MLJ 457, 460 PC It was cautioned here that any attempt to refuse relief merely on the ground that the court felt sorry for the borrower that it regarded the lender as arrogant, boorish and unmannerly. Therefore, if there is NO cause to the contrary that could be proved to be in existence, the court is obliged to make an order for sale on the application of the chargee. i. Defective or Improper Notice of Demand

Procedural defect in application Co-operative Central Bank Ltd v Meng Kuang Properties Bhd [1991] 2 MLJ 283

Here the bank had sent a notice of demand which included the charge of default interest. The court held that the plaintiff bank was not entitled to charge default interest since they had not given any notice pursuant to clause 5 of the charge annexure which required that a notice that default interest was to be imposed, before it was actually could be imposed. The courts mentioned that on the issue of whether the plaintiff bank is not entitled to claim for default interest, the issue stood on a different footing for if the plaintiff had in their notices of demand asked for something to which they were not entitled then the notice would be rendered ineffective and invalid. Hence, the defendant had included the more than prescribed interests, which was definitely contrary to what had been agreed between parties (20% instead of 15%). The Learned judge, decided that by this circumstance, the plaintiff bank was not entitled to the remedy they sought for in the originating summons. RHB Bank Bhd lwn Syarikat Sungei Nal Timber Industries Sdn Bhd [2007] 4 MLJ 567 Court was to decide the position in Form 16D on the basis that (i) it was not served, (ii) no specific details of the breach and (iii) amount claimed was more than allowed. Court held that (i) the breach in Form 16D is sufficient for the purpose of Section 254(1)(a) of the NLC, (ii) the notice in the Form 16D is in relation to the breach or failure to pay the amount demanded in their earlier letter of demand, as such the P was correct in stating in Form 16D that the said breach was as a result of failure to pay the amount demanded in the said letter of demand; (iii) and details of the breach that resulted in the facilities being recalled and the later demand, is sufficient for it to be stated in the letter of demand sent earlier to the D. ii. Fraud

Tai Lee Finance Co Sdn Bhd v Official Assignee [1983] 1 MLJ 81 FC An application for order for sale of land in question will not be granted by the courts in cases where the chargee has been fraudulent or where the chargee and the chargor have acted in collusion to defraud third parties. I: A land had been double charged and upon default in repayment, the default order for sale was set aside by 2nd and 7th R. the As application was subsequently heard for

order for sale but set aside. The chargor had entered an agreement with Rs to develop the land. R opposed As application due to him failing to make proper inquiries as in regards to the land before executing the charges and shouldnt have solely relied on titles search in the Registry and the trial judge agreed. Inquiries would have led to knowledge of the sale, hence there was constructive notice and chargor bound to sell to R. As demand for sale of the land was held to be unconscionable and constituted a fraud on the respondents. He accordingly dismissed the application. The appellant appealed. H: (4) in this case in the light of the affidavit evidence, at the very most the appellant had constructive notice of the respondent's prior beneficial interests. There was no evidence to satisfy the court that there was fraud to which the appellant was a party. The respondents had not proved beyond reasonable doubt that the appellant had acted dishonestly, wilfully and consciously disregarding or violating the right of the respondents or in any way in collusion with the chargor; (5) the appeal must therefore be allowed and the application of the appellant's for sale of the land allowed. Overseas Chinese Corporation Ltd v Lee Tan Hwa & Anor [1989] 1 MLJ 261 The interveners (bona fide purchasers) successfully prevented the chargee from selling the charged land on the basis that, one firm of solicitors had acted for all the parties, and the chargees were aware to the registration of that the chargor retained only a limited interest in the land due to the sale of most of it to the interveners. Eng Ah Mooi v Overseas Chinese Banking Corporation [1983] 1 MLJ 209 FC

iii.

Contravention of Statutes

Defeasible under Sec 340(2): Non-compliance with the requirements of the Moneylenders Ordinance 1951 Phuman Singh v Kho Kwang Choon [1965] 2 MLJ 189 FC

Order for sale will not be granted in cases of non-compliance with the provisions of the Moneylenders Ordinance 1951. Trial judges decision upheld, that the registration of the charges under the Moneylenders Ordinance after an application had been commenced for an order for sale was out of time, and by reason of want of registration, they were consequently unenforceable. Associated Finance Corporation Ltd v Poomani [1972] 1 MLJ 117 High Court of Ipoh held that non compliance to the Moneylenders Ordinance 1951 (now the Moneylenders Act 1951, revised 1989) would render the contract unenforceable. Keng Soon Finance Bhd v MK Retnam Holdings Sdn Bhd & Anor [1989] 1 MLJ 457 PC The court refused an application by the chargee for an order for sale, stating that there is a duty on the part of the chargee to enquire if the housing developer (chargor) has a valid housing developers license. In the instant case, the chargor was not in possession of a valid developers licence. The being so, the court held that the charge was void ab initio. United Malayan Banking Corp Bhd v Syarikat Perumahan Luas (No 2) [1988] 3 MLJ 352 Charge having been registered in breach of an explicit statutory prohibition imposed on the title to the charged land pursuant to the provisions of Sec 120 (restrictions towards the land), the title or interest of the charge is defeasible since registration thereof had been obtained by means of insufficient or void instrument. Also Registrar of Titles is registering charge ultra vires to his power (Sec 340(2)(c)). If the terms of a statute are absolute and do not admit of any relaxation or exemption, anything done in contravention thereof, will be ultra vires and no person can be estopped from putting forward the contention that what was done was illegal or void. Effect: void and unenforceable: Co-operative Central Bank Ltd (In receivership) v Feyen Development Sdn Bhd [1995] 3 MLJ 313. On allowing the appeal for a third party charge that was initially held to be void, the court stated that the though the general rule is that where a contract is prohibited by

statute expressly or impliedly, and the statute stipulates penalties for those entering into it, the contract shall be void and unenforceable (unless saved by the statute itself or if there are contrary intentions), however, the trend of the courts seem to be that they are less ready to consider it illegal or unenforceable simply because it contravenes with a statute.

See also the Court of Appeal decision in Harta Empat Sdn Bhd v Koperasi Rakyat Bhd [1997] 1 MLJ 381 for a different opinion from Feyen case, and the explanation by Federal Court in Co-operative Central Bank Ltd (In Receivership) v Feyen Development Sdn Bhd [1997] 2 MLJ 829. In Harta Empat case, the court was not absolved by S 133 (1)(a) of the Act from the restriction against providing the security for the loan made to its director by the respondent merely made it because the loan was for the benefit of the appellant. In the case, the funds were not meant to meet the disbursements of the director so that the prohibition against the appellant company providing the security would still be applicable. iv. Existence of Cause to the Contrary s 256(3)

Contrary to the rule of law or equity limited application. Court may not refuse relief merely because it feels sorry for the borrower or because it regards the lender as arrogant, boorish or unmannerly or because of the existence of prior unregistered claims: Keng Soon Finance Bhd v MK Retnam Holdings Sdn Bhd & Anor [1989] 1 MLJ 457 PC. Examples: Buxton v Supreme Finance (M) Bhd [1992] 2 MLJ 481 OCBC v Lee Tan Hwa [1989] 1 MLJ 261 Excluding: the submission that there is a breach of contract For example, Low Lee Lian v Ban Hin Lee Bank Bhd [1997] 1 MLJ 77 (b) Position of Bona Fide Purchasers

The interest of a bona fide purchaser with or without notice of the charge cannot prevail, in the absence of section n 340(2), over that of a registered charge. This was held in the cases Keng Soon Finance Bhd v MK Retnam Holdings Sdn Bhd & Anor [1989] 1 MLJ 457 PC and Buxton v Supreme Finance (M) Bhd [1992] 2 MLJ 481 SC, however, OCBC v Lee Tan Hwa & Anor differed. Buxton v Supreme Finance (M) Bhd There were purchasers who had obtained end-financing from the chargee. The properties of those purchasers were not included in the chargees application for the order for sale. It had been stated in Clause 30 that a separate account be kept for the monies from the purchasers but this was held to not apply. The indefeasibility of the chargees registered interest is not affected by the chargors conduct, however unconscionable or deceitful it may be. The SC by way of obiter, would seem to suggest that such a measure could have protected the other purchasers. Whether this would have constituted cause to contrary in the sense that the chargee would be estopped from denying the rights of the purchasers, however was not discussed. OCBC v Lee Tan Hwa Parts of the land in question were sold and subsequently, a charge was created over the whole of transactions. It was held by the HC that knowledge of the solicitor as to the existence of the prior claims of the purchasers could be imputed to the chargee. As a charge could not be created over land which the chargor did not own and as the chargee had notice of the purchasers claim, the charge was not valid. Hence, the grant of order for sale would be unjustifiable. Note: this was decided before Keng Soon and even so, HCs decision made no reference to Keng Soon, hence it has been submitted that this has been overruled by Keng Soon and Buxton. For the position under Land Code (Cap 81), Sarawak, s 148(2)(c), see also Kuching Plaza Sdn Bhd v Bank Bumiputra Bhd v& Anor [1991] 3 MLJ 163 SC The application of cause to the contrary under s 256(3) is different from the Islamic financing: Arab-Malaysian Merchant Bank Bhd v Silver Concept Sdn Bhd [2005] 5 MLJ 210

Other cases: Oriental Bank v Santhnavakey [1998] 4 CLJ Supp 417 Phileo Allied Bank (M) Bhd v Narendran s/o Zhambimuthu [1999] 3 AMR 3721 OCBC Bank (M) Bhd v Astano Electric Sdn Bhd [1999] 3 MLJ 618 Ban Hin Lee Bank Bhd v Pang Lai Hin [1999] 2 MLJ 234 Overseas Union Bank (M) Bhd v L&H Properties Sdn Bhd [1999] 2 MLJ 637 Phileoallied Bank v Saddhona Indran Sevapragasan [1999] 3 CLJ 649 Perwira Affin Bank Bhd v Saad b. Abdullah & Anor [1999] 6 MLJ 418 Hong Kong Bank (M) Bhd v Nor Harizan binti Mohd Ali [1999] 2 AMR 2493 (c) Other important issues: Sec 253: Purpose and scope of this Chapter: Order for sale Sec 256(2): Registry title; procedure Order 83 Rules of High Court 1980. Kandiah Peter v Public Bank Bhd [1994] 1 MLJ 119 Failure of the chargee to obtain order for sale does not prohibit the chargee from taking action in personam against the chargor. I: The appellant had charged certain lands to the respondent. The respondent later obtained orders for sale of the appellant's land. The appellant unsuccessfully applied to set aside the orders and subsequently brought an action for a declaration that the charges and annexures relating to the land were null and void and for consequential relief. In his statement of claim, the appellant raised and relied on facts and issues which the trial judge found to be identical to those raised by the appellant in the foreclosure proceedings. The trial judge therefore dismissed the appellant's claim on the

ground that the matter was covered by the doctrines of estoppel and res judicata. The appellant appealed. H: (1) A chargee who makes an application for an order for sale in foreclosure proceedings does not commence an action. He merely enforces his rights as a chargee by exercising his statutory remedy against the chargor in default. In order for the doctrines of res judicata, cause of action estoppel or issue estoppel to apply, the earlier proceedings must have resulted in a final judgment or decree. This requirement is not met by foreclosure proceedings which do not result or terminate in a final judgment or decree. (2) Where a chargor raises issues and relies upon facts to show 'cause to the contrary' in proceedings brought against him by the chargee, he is not barred from bringing a fresh action against the chargee (notwithstanding that an order of sale has been made) and raising in that action the same or similar facts and issues as those raised by him in the foreclosure proceedings. Neither res judicata nor cause of action estoppel nor issue estoppel are available to the chargee to meet the chargor's action. (3) The trial judge was in error when he held that the appellant was estopped by res judicata from raising in the subsequent action the identical issues which he had raised in the foreclosure proceedings. The appeal was therefore allowed and a retrial of the action was ordered. Perwira Affin Bank Bhd v WT Low & Ng Realty Sdn Bhd [1997] 5 MLJ 185. Other cases: Malayan Banking Bhd v Yong Chao Foo [1992] 2 CLJ 842 Arab-Malaysian Bhd v Razshah Enterprise Sdn Bhd [1993] 1 CLJ 41 United Malayan Banking Corp Bhd v Chong Bun Sun and another application [1994] 2 MLJ 221 Bank Pertanian Malaysia v Mohd Gazzali Mohd Ismail [1997] 3 CLJ Supp. 299 EON Bank Bhd v Deb Brata Das Gupta & Anor [1999] 6 MLJ 714 Foo Yoke Foon v Public Bank [2000] 3 CLJ 405

Public Bank Bhd v Noor Ehsannuddin bin Mohd Harun [2001] 5 MLJ 246 United Merchant Finance Bhd v Chang Miau Sin [2001] 1 CLJ 660 Phileo Allied Bank (Malaysia) Bhd v Koahish Credit & Leasing Sdn Bhd [2000] 4 CLJ 788 Arab-Malaysia Finance Bhd v Chan Sai Mee [2001] 6 CLJ 1 Malaysian Building Society Bhd v Univein Sdn Bhd [2002] 2 CLJ 81 Bumiputra Commerce v Tengku Ngah Putra bin Tengku Ahmad Tajuddin [2002] 4 MLJ 63 Lum Choon Realty Sdn Bhd v Perwira habib Bank Malaysia Bhd [2003] 4 MLJ 409 EON Bank Bhd v Hotel Flamingo Sdn Bhd [2005] 5 CLJ 253 OCBC Bank (Malaysia) Bhd v Au Kee Sian & ANor [2006] 4 CLJ 597 4.5.3 Powers of Land Administrator Sec 260: Application to Land Administrator for order for sale. Applicable to Land Office title, form qualified title under the LO, subsidiary title, whole or undivided share or lease. Effected by Form 16G Sec 261: Enquiry Upon receiving such application, LA will appoint a time and place to hold an enquiry, will notify the chargee of the time and place of the enquiry and cause a summons to be served on the chargor, requiring him to appear at the enquiry. Sec 262: Provisions as to enquiry Persons allowed to adduce evidence as appointed by chargor or chargee, chargor and chargee allowed to apply for postponement or change of venue. If chargee fails to appear, application dismissed. If chargor isnt there, they LA shall decide if it is to be held ex parte or at a

later date (with fresh summons served). If many chargees or chargors, and only some or one appear, it may be adjourned. Q: What is the Land Administrators jurisdiction? Suppiah v Ponnampalam [1963] MLJ 202 At the enquiry to determine whether an order for sale should be made, the LA should not go behind the register. If he is satisfied that the charge in question is on the register, he has only to decide whether or not there has been a default in the payment provided for and if so, he is obliged to make an order for sale. Government of Malaysia v Omar bin Hj Ahmad [1983] 1 CLJ 242 At the conclusion of the enquiry, the LA, where he is satisfied that there is no existence of any cause to contrary, is obliged to make an order for sale. In this case, the chargor paid in monthly installments that were by deduction from his salary, but upon change of work (Lembaga Tembakau Negara to Information Department), a possible technical error occurred which caused the monthly deduction to stop. Chargee requested for an order for sale under Sec 260. Eusoff Chin J said in his judgment that Sec 263(1) imposes a duty on the Collector to order the sale of land which the charge relates unless he is satisfied that there is no existence of the charge or that there is no breach by the chargor of the agreement complained of, or if the breach was not caused by the chargor. Gurpal Singh v Kananayer [1976] 2 MLJ 34 Learned judge in this case said that the Assistant Collectors duty is not to adjudicated pleadings usually heard in Court. The Land Office is not a court under Section 3 of the Subordinate Courts Act 1948. The duty of a Collector is limited and does not involve going behind the charge in view of Sec 340(1). He quoted Suppiah v Ponnampalam [1963] MLJ 202 which stated that the Collector was bound to accept the register and once he was satisfied that the charge with which he was concerned was on the register then the only question for him to decide was whether or not there had been a default in payments provided for and if he was so satisfied to make an order for sale.

See also the powers of LA under Sec 23-39. The power to enquiry is limited and not as wide as the Court. 4 limitations: i. Sec 33: No alterations to decisions made by an LA except circumstances mentioned under Sec 34. New evidence: admitted by Sec 37 appeal, not more than 3 years after such decision made. Lim Yoke Foo v Eu Finance Bhd [1985] 1 MLJ 17 It is only at the conclusion of the enquiry that the LA has jurisdiction to order a sale. The LA has no power whatsoever to cancel such an order once made, although he may postpone the sale, if expedient, or correct verbal errors or remedy accidental defects or omissions if not matters of substance. ii. Order for sale to be made if no existence of cause to contrary.

Government of Malaysia v Omar Bin Hj Ahmad [1983] 1 CLJ 242 At the conclusion of the enquiry, the LA, where he is satisfied that there is no existence of any cause to contrary, is obliged to make an order for sale. iii. Sec 419: Power of LA/Registrar to refer questions to the court.

Gurpal Singh v Kananayer [1976] 2 MLJ 34 iv. Sec 265(2): Procedure at sale: LA may delay the sale if no bids or land/lease withdrawn from sale NKM Properties Sdn Bhd v Rakyat First Merchant Bankers Sdn Bhd [1992] 2 MLJ 349 SC. The power of LA under s 263(1) is to order for sale of the charged land or lease. The order can only be set aside if there is cause to the contrary. See s 261(1)(c). 4.5.4 Other matters pertaining to order for sale Sec 263: Order for sale, and matters to be dealt with thereby -> 16H

Sec 264: Procedure prior to sale -> notice to chargor/chargee/public Sec 264A: Postponement or cancellation of an order for sale by LA Sec 265: Procedure at sale Sec 266: Right of chargor to tender payment at any time before sale. Sec 266A: Statement of payment due Cases: Bank Bumiputra Malaysia Bhd v Pentadbir Tanah Daerah, Gombak [1992] 1 MLJ 78 Perwira Affin Bank Bhd v Lim Weo Co [1998] 3 MLJ 56 Bank Pertanian Malaysia v Bakar @ Ismail b. Pelan [1999] 1 AMR 228 Procedure safeguarding the public auction Eon Bank Bhd v Deb Brata Das Gupta & Anor [1999] 6 MLJ 714 Oriental Bank Bhd v Sykt Zahidi Sdn Bhd [1999] 1 CLJ 810 Lee Phet Boon v Hock Thai Finance Corp Bhd [1999] 3 MLJ 501 United Merchant Finance Bhd v Diamond Peak Sdn Bhd [1999] 3 CLJ 791 4.5.5 Powers of Court/ Land Administrator after the Granting of an Order for Sale MUI Bank Bhd v Cheam Kim Yi (Beh Sai Ming, Intervener) [1992] 2 MLJ 642 SC Once an order for sale has been granted, drawn up and perfected, the court is funtus officio. M&J Frozen Food Sdn Bhd v Siland Sdn Bhd [1994] 1 MLJ 294 SC. Malayan United Finance Bhd v Liew Yet Lan [1990] 1 MLJ 317; Siland Sdn Bhd v M&J Frozen Food Sdn Bhd [1990] 2 MLJ 502. Chi Liung Holdings Sdn Bhd v L&T Realty Sdn Bhd [2000] 3 MLJ 171 CA. Maimunah Bt Megat Montak v Maybank Finance Bhd [1996] 2 AMR 2473.

Other cases: Association Finance Corporation Ltd v Poomani [1972] 1 MLJ 117 Tan Teng Pan v Wong Fook Shang [1973] 1 MLJ 31 Asia Commercial Finance v Dev & Realtor [1992] 2 MLJ 504 Lum Choon Realty Sdn Bhd v Perwira habib Bank Malaysia Bhd [2000] 3 CLJ 119 Pan Wai Mei v Sam Weng Yee & Anor [2006] 1 CLJ 914 4.6 Rights /Relief for the Chargor and Third Parties Until the registration and notwithstanding the conclusion of the sale, the chargor is not divested of his proprietary rights. He has the right to intervene to set aside any sale on the ground of fraud, impropriety or any breach of any statutory or contractual terms of the sale. Sec 266: Right of chargor to tender payment any time before sale. Rights of chargor Malayan United Finance Bhd, JB v Liew Yet Lan [1990] 1 MLJ 137 The rights of a chargor may still remain to an extent. M&J Frozen Food Sdn Bhd v Siland Sdn Bhd [1994] 1 MLJ 294 SC The right of discharge of a charge is available at the instance of a chargor and no other. Until registration of purchaser & notwithstanding the conclusion of the sale, the creditor is not divested of his proprietary rights. He has the right to intervene to set aside any sale on ground of fraud, impropriety, or any breach of statutory or contractual term of sale. (In the event where the new purchaser fails to pay, the subsequent chargee can intervene before the new order for sale and try to obtain the property by paying the price owed plus the necessary costs incurred) Kimlin Development Sdn Bhd v Bank Bumiputra Malaysia Bhd You can still discharge of the charge as long as its before the auction is successful.

Malayan United Finance Bhd v Tan Lay Soon [1991] 1 MLJ 504. 4.7 Effect of order for sale Sec 267(1): Effect of Sale Sale given under Sec 259 or 265 in respect of charge land or lease will be registered with (a) a title discharged of all liabilities (b) as if the chargor had transferred the land or lease to the purchaser as if under Part 14 (transfer of land) Position after the registration of certificate of sale: The position before the registration but after the payment of full purchase price: M&J Frozen Food Sdn Bhd & Anor v Siland Sdn Bhd [1994] 1 MLJ 294. Effect on the tenancy without endorsement: Hotel Ambassador (M) Sdn Bhd v Seapower (M) Sdn Bhd [1991] 1 MLJ 404 SC. Effect on the interest other than the method created under the NLC, see Holee Holdings (M) Sdn Bhd v Chai Him & Ors [1997] 4 MLJ 601. Other cases: Malayan United Finance Bhd, Johore Bahru v Liew Yet Lan [1990] 1 MLJ 317 Perdana Properties Bhd v Yong Chon [1990] 1 MLJ 433 KL Finance v Yap Poh Khian [1992] 1 MLJ 472 Puah Bee Hong & ANor v PTD Wilayah Persekutuan Kl & Anor (Teo Keng Tuan Robert, Intervener) and another appeal [1994] 2 MLJ 601 Lee Kim Guan v Malayan Produce Co Sdn Bhd [1993] 2 AMR 29:1259 (a) Purchase price obtained from the sale Sec 267A: Application of deposit upon failure to settle purchase price etc -> as what required in Sec 268 Sec 268: Application of purchase money -> State Authority whatever required, payment for administration etc.

(b) Sale Private Treaty Kimlin Housing Development Sdn Bhd v Bank Bumiputra Malaysia Bhd [1997] 2 MLJ 805 Court held that remedy of chargee of the land charged is only limited to the provisions of the NLC. This kind of sale can be done outside the NLC (i.e. debenture) If you want to follow NLC, its only by public auction, but if theres not title charge, then you can go through a private auction/treaty. Chung Khiaw Bank v Lau Ah Yen [1989] 2 MLJ 247 Where it was held that the provisions of section 260 of the NLC contemplates a sale by public auction only and as such the court has no power to order sale by private treaty under the Code. But Wan Adnan J noted that the court may allow a sale by PT in circumstances where the court is satisfied that the proceeds of such sale are not less than the amount due to the chargee under the charge and that the chargee will be duly paid in full out of the proceeds. Also, it was noted that the court refused permission for sale by PT referring to express terms of Sec 259(2)(c) of the NLC which require the land to be put for public auction, but on terms of Sec 266(1), it seemed to support the right to fall back on PT when attempts to sell by public auction have been exhausted. Priyamas Export Corp Sdn Bhd v Bank Buruh (M) Bhd [1998] 3 MLJ 273. Kimlin case has criticized Chartered Bank v Pakiri Maidin [1963] MLJ 276 See also: Malaysia Credit Finance Berhad v Yap Hock Choon [1989] 1 MLJ 232. Malayan United Bank v Cheah Kim Yu [1991] 1 MLJ 313 Malaysia Credit Finance v Yap Hock Choon [1989] 1 MLJ 232 Inter-Rally Motor Sdn Bhd v Karupiah a/l Palaniasamy [1992] 2 MLJ 650 Mui Bank Bhd v Cheam Kim Yu (Beh Sai Ming Intervener) [1992] 2 MLJ 642 UMBC v Chong Bun Sun and Nor Application [1994] 2 MLJ 221 4.8 Discharge of Charge

Chargee is obliged to discharge the charge upon full and final settlement of the loan amount secured by the charge. NLC provides that Sec 278 provides that by Form 16N charge of the land or lease and release the land from all further liability. The discharge is effective from the date on Form 16N as registered at relevant land office. In the sale of a private treaty, the chargee should discharge the charge so as to give full effect to the sale. In this case, if the partial discharging of the charge also means not obtaining a security over the remainder of the debt, the risk is to be borne by the chargee. In some occasions, the debt is protected outside the NLC, perhaps by a third party, which may cover the rest of the debt. Though the charge is discharged, the guarantee will remain in force. In the full discharge, it is doubtful whether the guarantee which is linked to the debt remains in force, in this case, when a primary debt is discharged, so will the accessory obligation. So nowondays they use the word guarantor and principal debtor. This means that event there is a discharge, the chargor is not released from his personal liability. Discharge by payment to Registrar in Cases of Death, Absence or Disability Relief can be applied to the Registrar by Sec 279(1) if he is entitled to pay off the charge but chargee is unable or unwilling to accept the payment:a. b. Chargee dead, or cannot be found, or evade/refuses to receive payment Unable to trace anyone who can receive on his behalf

The money received by the Registrar for such discharge can be:a. b. c. Played in custody of Public officer Registrar feels fit Be claimed by person or body entitled within 6 years of date of deposit If not claim, paid to the Consolidated Fund of the State

If land/lease discharged from liability under any charge by payment to the Registrar under Sec 279, the registration of the charge shall be cancelled by the Registrar pursuant to Sec 314. Malayan United Finance Bhd v Tan Lay Soon [1991] 1 MLJ 504.

Eng Ah Mooi v Overseas Chinese Banking Corporation [1983] 1 MLJ 209 FC.