Thilagavathy

- vs -

The Senior Assistant Registrar of the High Court

Judgment

Suriyadi Halim Omar, J

1. The plaintiff had filed Encl 1 which was an originating summons praying for a declaration that:

   1. pursuant to an auction held on June 5, 2002 pertaining to a house at No 67, Jalan USJ 7/2K, 47610 UEP Subang Jaya, Selangor ("the house"), as she was the only bidder at the reserve price of RM260,000, she be declared the successful bidder, with the sale concluded in her favour;

   2. the contract under the proclamation of sale be completed in her favour at that reserve price upon the usual terms and condition; and

   3. further relief or other directions as the court shall deem fit.

2. The grounds in support of this application showed that the plaintiff was desirous of the house, which was to be auctioned on June 5, 2002 at the reserve price of RM260,000, at the Shah Alam High Court. To pursue her ambition to buy that house, she came up with a deposit of RM26,000, in the form of a bank draft made in favour of the Senior Assistant Registrar of the Shah Alam High Court (Exh TD-1). She dutifully filed the bidding form to bid in her personal capacity, and thenceforth handed the above bank draft to the court bailiff. That bank draft was impeccable. The plaintiff with her solicitors assembled at the auction room for the auction to start at around 10.00 a.m.

3. On arrival of the Senior Assistant Registrar, one Ahmad Faizadh Yahya, the auction commenced. Even at the very start it was quite obvious that, apart from the plaintiff there were no other bidders. The auctioneer and the Senior Assistant Registrar were equally aware of that fact, as it was too obvious for comfort. Before the auction began, consultation took place between the Senior Assistant Registrar and the licensed auctioneer, and thereafter the auction was proceeded with. Without further ado the auctioneer opened the auction with a bid of RM263,000 i.e. RM3,000 more than the reserve price. As the plaintiff could only afford the reserve price of RM260,000, which was the prevailing market value of that house, she thus could not offer the opening price. Her solicitor thereafter attempted to explain to the Senior Assistant Registrar that as there was a bid at the reserve price, and there being no other higher bid, the sale should be concluded in her favour. Unfortunately the Senior Assistant Registrar refused to relent, and thereafter terminated the auction, on the premise that there were no bidders. I now touch on the law.

4. In brief, after a court order for sale has been obtained, whereby a piece of property will be subject to public auction, the provision of s 257(1)(d) of the National Land Code 1965 must be complied with. Under the latter provision, every order of sale made by the court under s 256 of the NLC, inter alia, shall require the Registrar of the court to fix the reserve price, which will be equal to the estimated market value of the land or lease in question (s 257(1)(d)). As the word "shall" has been promulgated, the latter provision mandatorily demands that:

   1. the Registrar fixes a reserve price;

   2. the purpose is for the sale;

   3. the price is equal to the estimated market value of the land or lease in question; and

   4. by interpretation the fixing of the reserve price must be done before the sale.

5. As stated under (iv) above by interpretation of s 257(1)(d) of the NLC, the reserve price must be decided and fixed before the sale begins. The Registrar is not permitted at the point of time of the sale to suggest a change in the reserve price, as the time is past. The procedure or auction proceedings must never be a victim of his whims and fancies. It must also be stated that as the role of any licensed auctioneer is only to assist in the sale and no more, then under no circumstance is the Registrar to submit himself to the direction of the auctioneer, as in this case to submit to the suggestion of the latter that the reserve price be changed. To do that will be ultra vires his powers as an officer of the court.

6. The above estimated market value that has been fixed will be included in the auction advertisement, and based on that information the plaintiff had prepared the 10% deposit, an amount determined earlier by the Registrar (s 257(1)(e)). The court will give public notice, advertised in accordance with rules of court which will include particulars of land to be sold, particulars pertaining to the date on which the sale is to be held and the reserve price, conditions of sale such as the need of a successful bidder to deposit a certain percentage of the purchase money immediately on the fall of the hammer, and to pay the balance within a certain period. The order of the court is not good enough as a public notice; the latter must contain, among others particulars of the court order.

7. The auction or interchangeably the sale will be under the direction of the Registrar of the court, who may as indicated above engage a licensed auctioneer to assist him. If there is no bidder at or above the reserve price, that officer of the court will withdraw the impugned land/lease/sublease from the sale, and direct that it be put up for auction on a subsequent date (s 259(2)(c) of the NLC).

8. The chargor may, at any time before the conclusion of the sale i.e. before the fall of the hammer, tender to the Registrar of court the amount due to the chargee, together with such further amounts that have fallen due under the charge. If he does that, then the court order will cease to have effect, and that court officer will inform the chargee accordingly. That payment by the chargor is about one of the legal situations when the Registrar of court may discontinue an auction, and deny any potential bidder of that property. Otherwise the auction must be proceeded with and enforced.

9. When the sale is in progress under s 259(1) of the National Land Code 1965:

   The officer under whose direction the sale takes place shall- (c) in the absence of any bid at or above the reserve price, withdraw the land or lease in question from the sale, direct that it be put up for auction on a subsequent sale ...; and (d) subject to paragraph (c) declare the sale concluded in favour of the highest bidder. [Emphasis added]

10. Perusing the above provision, which is mandatory in effect and barring any untoward reason, the Registrar of court must declare the sale concluded in favour of the highest bidder. Therefore regardless of the number of bidders, even if there were only to be one, that court officer must declare the sale concluded in favour of that solitary bidder, conditional on his bid being not below the reserve price and in accordance with law (Penolong Kanan Pendaftar Mahkamah Tinggi Johore Bahru v Tan Beng Sooi [1997] 2 AMR 1094).

11. For the sake of completion, in the event the chargor has failed to pay up the amounts due, and if there were to be a successful bidder who has paid up the full amount of the purchase price, the Registrar under s 259 will prepare the certificate of sale. It will be in Form 16F. After the required stamping, and after presentation to the Registrar, the certificate of sale equivalent to an instrument of dealing will be registered.

12. In this case as the plaintiff was the only bidder, and there were no others bidding above the reserve price, the plaintiff should have been declared the successful bidder (s 44 of the Specific Relief Act 1950). In addition to the above mistake, the Registrar here had committed two others viz to submit to the direction of the licensed auctioneer, and the last minute change of the reserve price at the time of the sale. It was based on all the above reasons that I had given "order in terms" to the application, without costs as agreed by the plaintiff.

Penolong Kanan Pendaftar Mahkamah Tinggi Johore Bahru v Tan Beng Sooi [1997] 2 AMR 1094

Legislations

National Land Code 1965: s.256, s.257(1)(d), (e), s.259, s.259(1), (2)(c), Form 16F

Specific Relief Act 1950: s.44

Representation

M Sivalingam, YN Kim & Kalai Chelvi (KIM & Associates) for Plaintiff

Notes:-

This decision is also reported at [2002] 4 AMR 3867