Tutorial 4 Question 3 (Adapted from CLP 2007)

J is the registered proprietor of a certain piece of property. He created a

Third party charge in favour of Grand Bank Bhd. (GBB) to secure a loan
granted to Contractors Sdn. Bhd.(CSB). CSB defaulted in the loan
repayments and GBB commenced proceedings for an Order of Sale. The
Summons was duly served on J. There were some adjournments of the
hearing of the Summons. At the last adjourned hearing J was absent
because GBB did not serve the notice of the adjourned hearing on him. The
Order for Sale was granted by the Court.
The auction was carried out and K was the successful bidder. The property
was subsequently registered in Ks name. Some months later J applies to
Court to declare the Order of Court a nullity and the Court grants the
application.
Both GBB and K are unhappy with the decision and wish to appeal.
Advise GBB and K on the viability of the appeal.

The main issue would be whether GBBs failure in serving notice on
informing J of the adjourned hearing entitled J to set aside the order for
sale.
O.83 r.2(4) of the Rules of Court 2012 clearly requires the chargee
plaintiff, ie. GBB, to serve a written notice on J to inform him of the adjourned
hearing not less than 2 clear days before the day fixed for the hearing.
GBB failed to comply with this rule. Thus, the effect of non-compliance
will be discussed in the following cases.
In the case of Asia Commercial Finance (M) Bhd. v. Kimden Housing
Development Sdn. Bhd,
1
an order for sale over property charged to the
plaintiffs was granted in the absence of the defendants, at an adjourned

1
[1993] 1 MLJ 283
hearing. Subsequent to the order for sale, the defendants were wound-up in
pursuance of a winding-up petition. The private liquidator, who took over from
the provisional liquidator in June 1992, applied on behalf of the
defendants, inter alia, to set aside the order for sale on the ground of errors in
the affidavits filed in support and non-compliance with the existing rules and
regulations in the foreclosure application.
The High Court held that the non- compliance with O.83 r.2(4) entitled
the defendants to have the order for sale set aside as of right, ex debito justitiae.
The right to have a judgment set aside ex debito justitiae relates to the judgment
having been obtained irregularly, which might involve the deprivation of the
rights of one party of being heard. The setting aside order need not have any
terms whatsoever attached thereto, nor is the defendant required to disclose that
he has a defence on merits or that there is an arguable or triable issue.
In the current case, J was deprived of his rights to be heard for lack of
knowledge as pertaining to when is the next hearing date. His right to be
informed of the adjourned hearing date was not affected by his absence at the
first hearing. It should be the duty of the charge plaintiff, not the Court, to
inform the chargor defendant of the adjourned date.
In the case of Muniandy Thamba Kaundan & Anor V. Development &
Commercial Bank Berhad & Anor,
2
neither of the chargors were served with
notice of the adjourned hearing dated 29 January 1992 when the ex-parte orders
were made. Before the learned Judge, the chargors argued that the non-service
of notice had resulted in a breach of natural justice contrary to O.83 r.2(4) of
the Rules of the High Court 1980 (RHC), by reason which the ex parte orders
were rendered null and void. The Federal Court held that the failure on the part
of the chargees to notify the chargors of the date of the adjourned hearing was
of such fundamental importance that it must render each of the ex-parte orders

2
[1996] 2 CLJ 586
obtained a nullity. The defect is so fundamental as to entitle the chargors to
have the judgment avoided and set aside as of right.
O.83 has a common law content which means that the Order is merely a
statutory enunciation of the fundamental rule of natural justice as expressed in
the maxim audi alteram partem, so that the obligation to serve notice of the
adjourned hearing of the originating summons remained even if O.83 r.2(4) did
not apply.
In the case of Malayan Banking Bhd v. Pk Rajamani & Anor,
3
the facts
are similar to the current case whereby in the alleged case, the defendant is the
registered proprietor of a piece of property ('the said property') which was
charged to the plaintiff as security for a loan granted to a third party. The third
party defaulted in his loan repayment which resulted in foreclosure proceedings
being commenced against the said property. There was a postponement of
hearing and no notice of the postponement was served by the plaintiff on the
defendant. An Order for Sale was made in the absence of the defendant and the
property was sold off.
It is to be contemplated that the notice requirement as set out in O.83
r.2(4) of the Rules of High Court 1980 is mandatory. It is the duty of the
plaintiff not the Court to inform the defendant of the date of the adjourned
hearing. The failure on the part of the plaintiff to comply with the requirements
of this Order amounted to the deprivation of the defendant's fundamental right
to be heard. The Order for Sale was therefore and irregularity which the
defendant is entitled to set aside as of right.
Therefore, it is to be argued that a purchaser in good faith and for
valuable consideration would have an equity over the said property. The

3
[1997] 3 CLJ SUPP 353
intervener has none because his equity has been tarnished. The sale of the said
property by way of public auction ought to be set aside even though the
certificate of sale had been issued.
In the alleged case, the purchaser was an intervener but not a bona fide
purchaser. The auction sale was finalized after the bid of only one bidder (the
intervener) at just RM1,000 - above the reserved price when the other bidders
(who had paid the auction deposits) surprisingly refrained from making any bid.
The court found it to be a farce on public auction.
Hence, based on the above cases, GBBs failure in serving notice on
informing J of the adjourned hearing shall entitle J to set aside the order for sale
as J was able to show that to grant the application would be contrary to some
rule of law or equity [Murugappa Chettiar v Letchumanan Chettiar
4
] since
GBBs failure to inform was contrary to O.83 r.2(4). Therefore, apparently,
GBB and Ks appeal may not succeed.
However, based on the facts that J only applied to court to set aside the
order for sale after some months from the date of registration by K in Ks name,
it can be presumed that J is caught under O.42 r.13 of the Rules of Court 2012
which requires him to apply to court to set aside or vary the order within 30
days after the receipt of the order by him. Hence, the trial judge had erred in
allowing Js application since Js application is time barred. Therefore, GBB
and Ks appeal may be successful.
The next issue is whether K has an equity in the property.
In the case of Malayan Banking Bhd V. Pk Rajamani & Anor,
5
it was
held that purchaser in good faith and for valuable consideration would have an
equity in the said property whereas the intervener has none because his equity
has been tarnished. Hence, if K is a purchaser in good faith and for valuable

4
[1938] 1 LNS 42
5
[1997] 3 CLJ SUPP 353
consideration, he is entitled to seek for equitable remedy. Ks appeal may be
viable.
In conclusion, by relying on O.42 r.13 of the Rules of Court 2012, K
and GBB could appeal to the court to set aside the order granted in favour of J
on the ground that the court had failed to observe the limitation period imposed
under O.42 r.13 by allowing Js application to set aside the order for sale after
30 days from the receipt of the order or judgment by him.