Judgment

Linton Albert, J

1. The first defendant purchased from the second defendant the property consisting of a parcel of land situated in Tawau and described as Town Lease No 107524943 together with the hotel building thereon. The first defendant obtained a loan from Bank Bumiputra Malaysia Bhd (the bank) to purchase the property which was sold for RM22,000,000. The purchase price was fully paid for by the first defendant with the aid of a loan totaling RM16,000,000 disbursed in October 1994. A memorandum of transfer was executed to transfer the property from the second defendant to the first defendant and a memorandum of charge in favour of the bank was also executed by the first defendant as security for the loan. The two documents were not registered with the Central Land Office although the latter was duly registered with the Registrar of companies and the certificate of registration of charge duly issued.

2. The title deed to the property was also deposited with the bank. It is not disputed that in these circumstances there was then an equitable charge on the property and the second defendant was a bare trustee having no beneficial interest whatsoever in the property, the second defendant having divested itself of all its interest in the property (see Borneo Housing Mortgage Finance Bhd v Time Engineering Bhd [1996] 2 AMR 1537; [1996] 2 MLJ 12).

3. The plaintiff acquired from the bank all its powers rights interest and title in the property pursuant to and by virtue of a vesting certificate dated July 31, 1994 issued under s 14 of the Pengurusan Danaharta Nasional Bhd Act 1998 (the Act). A winding-up order was made against the first defendant on February 22, 2001 which prompted the plaintiff to require immediate repayment of the amount outstanding under the loan. The first defendant failed to repay the loan.

4. The plaintiff commenced these proceedings under Order 83 of the Rules of the High Court 1980 (RHC) by way of originating summons dated June 30, 2002 asking for an order to sell the property and among the numerous consequential reliefs asked for was an order for the first and second defendants to deliver or cause to be delivered vacant possession of the property. These were the only matters that could conceivably concern the second defendant and was accordingly so joined for those purposes.

5. Perhaps with a view to avoid the expenses incurred and delay caused by these proceedings, the plaintiff was quick to grab the opportunity when it was suggested by one Datuk Hiew Min Yong (Datuk Hiew) the chief executive of the second defendant that a related company was in the process of obtaining an offshore loan which would be utilized to pay off the first defendant's debt. Apart from causing the lengthy delay, nothing came out of the efforts to reach an amicable settlement although in the process the plaintiff managed to squeeze some payments from Datuk Hiew and the second defendant towards payment of part of the interest due on the debt but the total amount was too minute to be of any significance.

6. The second defendant opposed the plaintiffs application and filed an affidavit deposed to by Datuk Hiew who was also its director. Datuk Hiew's affidavit dealt almost exclusively with the unsuccessful efforts taken to reach an amicable settlement and the events which took place. The last paragraph of Datuk Hiew is relevant because it embodies the second defendant's opposition to the application and is, therefore, reproduced:

   The plaintiffs' claim of RM27,722,371.81 by their exh KA9 is not admitted nor is it evidence of proved debt due to the plaintiff by the first defendant. In the circumstances, I am advised and verily believe that the plaintiff is not entitled to the orders it seek by this originating summons.

7. The response to this was the argument advanced by learned counsel for the plaintiff that the second defendant lacked locus standi because it had parted with the property by having executed the memorandum of transfer in favour of the first defendant and was just a bare trustee. Additionally, it was argued that the debt sought to be recovered by the sale of the property was that which was owed by the first defendant to the plaintiff. The debt was not disputed by the first defendant and these proceedings relate to the debt due from the first defendant to the plaintiff and the property which the plaintiff seeks to sell to recover the debt. It stands to reason that the second defendant has no interest in the issues raised in the proceedings because it is not suggested that the second defendant has any interest in either the debt or the property. In Government of Malaysia v Lim Kit Siang; United Engineers (M) Bhd v Lim Kit Siang [1988] 2 MLJ 12, Abdul Hamid CJ (Malaya) had this to say at p 39:

   First, apart from certain cases in which standing to sue is in the discretion of the court, the plaintiff must possess an interest in the issues raised in the proceedings.

8. In my view this principle applies with equal force to a defendant in court proceedings and, in the words of Salleh Abas LP in that case, this is to protect the "judicial process from abuse by busy-bodies, cranks and other mischief-makers" (at p 29). It is patently clear that in the circumstances, the second defendant does not have the standing to question the existence of the proved debt due from the first defendant to the plaintiff. The plaintiffs response is, therefore, not without merit and is therefore sustained.

9. Contrary to the views expressed by Cecil Robertson, counsel for the second defendant, I am inclined to agree with the submission of Norbert Yap, learned counsel for the plaintiff, that the certificate of indebtedness issued by the plaintiff was conclusive of the indebtedness because it was issued by virtue of section f6.10 of the facilities agreement between the bank and the first defendant pursuant to the loan and was binding on the parties (see Citibank NA v Ooi Boon Leong [1981] 1 MLJ 282). The criticism made by the second defendant as to the correctness of the debt and how it was arrived at are, In my view, caught by s 14(6)(i) of the Act which reads:

   Without prejudice to the generality of subsections (1), (2), (3), (4), or (5), in any proceedings brought by or against the Corporation in respect of any asset vested in the Corporation pursuant to this section, no person shall raise as a claim or defence to such proceedings any of the following matters, unless such claim is a disclosed claim: (a) - (h) .... (i) there is an error in any statement of account issued by the seller or any other person in respect of any debt to which the asset relates.

10. The contrasting views expressed by Mr. Norbert Yap and Mr. Cecil Robertson concerning whether the words "any other person" in s 14(6)(i) of the Act includes the plaintiff can be resolved by resorting to Danaharta Urus Sdn Bhd v Kekatong Sdn Bhd [2004] 2 AMR 317; [2004] 2 MLJ 257 a case of high authority cited by Mr. Norbert Yap where at p 335 (AMR); p 285 (MLJ) Augustine Paul JCA delivering the judgment of the Federal Court said:

    Parliament's clear intention in enacting the Act was to ensure that the acquisition of non-performing loans by the appellant would ease the pressure upon banks and other financial institutions with the appellant being entrusted with the task, as the nation's Asset Management company, to take over these bad loans (together with securities, where available) with a view to maximise recovery values. The appellant was thus given three principal duties. They are: (a) acquisition of non-performing loans and assets; (b) management of such assets, including by way of the appointment of special administrators to temporarily manage the affairs of corporate borrowers in place of their directors; and (c) disposition of the acquired assets. In order to accomplish these objectives the appellant was given sufficiently wide and broad statutory powers to acquire loans and credit facilities by way of statutory vesting, to manage the affairs of corporate borrowers through special administrators appointed to formulate work-out plans in order to repay debts owing to creditors, and finally to dispose of charged assets.

11. It seems to me sensible that s 14(6)(i) is interpreted to include the plaintiff in order to fulfil the purpose of the Act, a proposition consonant with the dictum of Lord Simon of Glaisdale in Maunsell v Olins [1975] AC 373 at P 391:

    .... in statutes dealing with ordinary people in their everyday lives, the language is presumed to be used in its primary ordinary sense, unless this stultifies the purpose of the statute, or otherwise produces some injustice, absurdity, anomaly or contradiction, in which case some secondary ordinary sense may be preferred, so as to obviate the injustice, absurdity, anomaly or contradiction or fulfil the purpose of the statue.

12. The plaintiffs reliance on s 14(6)(i) was, therefore, justified. Although there is merit in Mr. Cecil Robertson's contention that there was non-compliance with Order 83 r 3 of the RHC 1980 because the certificate of indebtedness fell far short of its requirements, this is not fatal to the plaintiffs case. In Citibank NA v lbrahim Othman [1994] 1 AMR 369; [1994] 1 MLJ 608 an authority cited by the second defendant's counsel it was held that the objective of Order 83 r 3 is to enable the defendant to know at least at the date the originating summons is filed, what is the exact sum he is legally Ilable to pay so that he can make up his mind to contest or pay up. Mahadev Shankar J went on at p 379 (AMR); p 615 (MLJ) to state thus:

    Provided evidence of the correct amount due has been put before the final hearing, the court has the power to dispense some omission to fulfil the rules to the letter, but only if no real prejudice will thereby result to the defendant.

    Order 1A of the RHC 1980 also provides:

    In administering any of the rules herein the court or a judge shall have regard to the justice of the particular case and not only to the technical non-compliance of any of the rules herein.

13. The omissions here cannot by any stretch of the imagination be said to have prejudiced the second defendant. The second defendant's objection on this ground must therefore, fail. I have not considered the speculative opinions expressed by the second defendant's counsel relating to the propriety of not having the memorandum of charge registered and the applicability of the Sabah Land Ordinance (Cap 68) to these proceedings because these were matters that were not pleaded (see Ng Hee Thoong v Public Bank Bhd [1995] 1 AMR 622; [1995] 1 MLJ 281) nor are they relevant for the determination of the plaintiffs application.

14. I have for the reasons and in the circumstances aforesaid, allowed the plaintiffs application.

Cases

Borneo Housing Mortgage Finance Bhd v Time Engineering Bhd [1996] 2 AMR 1537; [1996] 2 MLJ 12, FC; Citibank NA v Ibrahim Othman [1994] 1 AMR.369; [1994] 1 MLJ 608, HC; Citibank NA v Ooi Boon Leong [1981] 1 MLJ 282, FC; Danaharta Urus Sdn Bhd v Kekatong Sdn Bhd [2004] 2 AMR 317; [2004] 2 MLJ 257, FC; Government of Malaysia v Lim Kit Siang; United Engineers (M) Bhd v Lim Kit Siang [1988] 2 MLJ 12,:SC; Maunsell v Olins [1975] AC 373, HL; Ng Hee Thoong v Public Bank Bhd [1995] 1 AMR622; [1995] 1 MLJ 281, CA

Legislations

Pengurusan Danaharta Nasional Bhd Act 1998: s.14, s.14(6)(i)

Rules of the High Court 1980: Ord.1A, Ord.83, Ord.83 r 3

Land Ordinance (Sabah) (Cap 68)

Representations

Norbert Yap (Jayasuriya Kah & Co) for plaintiff

Henry Mello (Insolvency Department, Tawau) for first defendant

Cecil Robertson (C Robertson) for second defendant

Notes:-

This decision is also reported at [2005] 3 AMR 736