MALAYAN BANKING BHD v. MARILYN HO SIOK LIN

 

[2006] 3 CLJ 796  

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MALAYAN BANKING BHD v. MARILYN HO SIOK LIN
HIGH COURT SABAH & SARAWAK, KUCHING
[ORIGINATING SUMMONS NO: OS-24-60-2005-III (II)]
DAVID WONG DAK WAH JC
8 JUNE 2006

BANKING: Banks and banking business – Al-Bai Bithaman Ajil house financing facility – Default in repayments – Bank claimed for sale price of property – Sale price included interest for full tenure of facility – Whether claim inequitable as facility terminated prematurely

The defendant took out an Al-Bai Bithaman Ajil house financing facility (‘BBA’) with the plaintiff bank. Under this facility, the plaintiff bought the defendant’s property at a purchase price of RM500,000 and then sold the property back to the defendant at a purchase price of RM995,205.64 that was to be paid in 240 monthly instalments at RM4,107 per month. As security for repayment, the defendant’s property was charged to the plaintiff. However, the defendant defaulted in payments after 14 months. The plaintiff brought the present action against the defendant for sale of the defendant’s property by public auction to satisfy the sum of RM928,589.12 being the balance of the sale price less the instalments paid by the defendant. The defendant contended that the plaintiff’s claim was inequitable because the sale price included interest for a period of 240 months. The defendant also contended that the plaintiff failed to comply with O. 83 r. 3 of the Rules of the High Court 1980 (‘RHC’) since the plaintiff failed to state the amount advanced and the relevant interests. Further, the defendant contended that she had no knowledge of the nature of the BBA banking facility, alleging a plea of non est factum.

Held (granting order for sale of defendant’s property but for a reduced sum):

(1) The non-compliance of O. 83 r. 3(7) RHC was curable by virtue of O. 1A and O. 2 r. 3 RHC. The court shall have regard to the justice of the case rather than non-compliance of the rules. Further, the defendant was not prejudiced by the non-compliance thereof. (para 12)

(2) The defendant had not shown to the court that she had satisfied the pre-conditions for the plea of non est factum to apply. As such, that allegation should be dismissed. (para 15)

(3) The case of Affin Bank Bhd v. Zulkifli Abdullah was an authority for the proposition that it would not be equitable to allow the bank to recover the sale price as defined when the tenure of the facility was terminated prematurely. Further, it was in the public interest that the Islamic Banking industry continued to flourish in this country and abroad. Adopting the interpretation given by the learned judge in the Affin case would enhance the process. (para 47 & 48)

Case(s) referred to:

Affin Bank Bhd v. Zulkifli Abdullah [2006] 1 CLJ 438 HC (foll)

Arab-Malaysian Merchant Bank Bhd v. Silver Concept Sdn Bhd [2006] 1 LNS 88 ; [2005] 5 AMR 381 (refd)

Bank Islam Malaysia Bhd v. Adnan Omar [1994] 3 CLJ 735 HC (refd)

Bank Kerjasama Rakyat Malaysia Bhd v. Emcee Corporation Sdn Bhd [2003] 1 CLJ 625 CA (foll)

Century Land Resources Sdn Bhd v. Alliance Bank Malaysia Bhd [2004] 4 CLJ 793 CA (refd)

Kuching Plaza Sdn Bhd v. Bank Bumiputra (M) Bhd [1991] 3 CLJ 1702; [1991] 1 CLJ (Rep) 223 SC (refd)

Malayan Banking Bhd v. PK Ralamani [1994] 2 CLJ 25 SC (refd)

Stockloser v. Johnson [1954] 1 QB 476 (refd)

K Umarkanda Rajah v. E L Magness [1984] 2 CLJ 23; [1984] 1 CLJ (Rep) 416 FC (refd)

Legislation referred to:

National Land Code, ss. 256, 257

Rules of the High Court 1980, O. 1A, 2, 3, O. 83 r. 3(3), (7)

Land Code (Cap 81) (Sarawak), ss. 148(1), (2)(c), (3), 151

Other source(s) referred to:

Dato’ Seri Visu Sinnadurai, Law of Contract, 3rd edn, p 319

Dr Norhashimah Mohd Yasin, Islamic Banking: Case Commentaries involving Al-Bai Bithaman Ajil, [1997] 3 MLJ cxcii

Dr Samar Kamar Hj Ab Latif, Legal Aspects of Interest-Free Banking in Malaysia, [1997] 2 MLJ xc

Mohd IIIiayas, Islamic/Interest-Free Banking in Malaysia: Some Legal Considerations, [1995] 3 MLJ cxlix

Of Islamic Loan and Other Matters of Interest, [2000] INSAF xxvix No 3, 91

Counsel:

For the plaintiff – Gabriel Wong; M/s Detta Samen & Court

For the defendant – Ernest Chua; M/s Ernest Chua & Court

[Order for sale to recover sum of RM598,689.10 as at 31 May 2006 and profit per day at RM106.16 until the date of satisfaction of sum owing under the charge..]

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