UUUK3043 LAND LAW II

SEMESTER 2 2021/2022

PREPARED BY: GROUP 5

1) AL-IESLAH BINTI BADRUL HISHAM (A175551) 6) MASYITAH BINTI AYOIB (A173744)

2) SITI AISHAH BINTI NORIZAN (A173658) 7) ELAVARASI MANOKARAN (A173627)
3) SARANYA A/P GANESAN (A176169) 8) SHARON PRIYA ARUL DAS (A173639)
4) AZIZAH BINTI MOHD DAUD (A174605) 9) ALFRED NGU CHOUNG CHII (A176776)
5) SITI NUR JANNAH BINTI JONO (A176978) 10) NURUL ATHIRAH BINTI AZALI (A176979)

LECTURERS:

1) DR. SAIDATUL NADIA ABD AZIZ

2) DR. NADHILAH A.KADIR
3) ASSOC.PROF.DR. JADY@ZAIDI BIN HASSIM
INTRODUCTION TO CHARGE

Security dealings are dealings whereby a registered proprietor conveys his land to either a Bank,
finance company or moneylenders to secure the repayment of a loan. A charge is described as a
type of security dealing in which a registered proprietor creates interest in his land as security for
the repayment of a loan provided to him. According to Section 243 of the National Land Code, a
valid charge under the National Land Code is a charge that is registered. Section 243 stated that
“Every charge created under this Act shall take effect upon registration so as to render the land
or lease in question liable as security in accordance with the provisions thereof, express or
implied.” . The charge is a creation of a statute and is different from the common law deed of
mortgage. Section 241(1) empowers the owner of alienated land to create a charge over his land.
However, the power is also subjected to the restrictions imposed in section 241(3) of the NLC. 1
The case Citibank Bhd v Mohamad Khalid bin Farzalur Rahman & Ors [2000] will be discussing
with regard to the notice of charge. The case are as follows:

CITIBANK BHD v MOHAMAD KHALID BIN FARZALUR RAHAMAN & ORS [2000] 4
MLJ 96

COURT: COURT OF APPEAL (KUALA LUMPUR)

DATE: 20 JUNE 2000

JUDGES:

1) GOPAL SRI RAM

2) SITI NORMA YAAKOB

3) MOKHTAR SIDIN JJCA

APPELLANT: CITIBANK BHD

RESPONDENT: MOHAMAD KHALID BIN FARZALUR RAHAMAN & ORS

1
Ainul Jaria Maidin, Sharifah Zubaidah Syed Abdul Kader, Bashiran Begum Haji Mobarak Ali, Nor Asiah
Mohamad Azlinor Sufian, Ratna Azah Rosli, Fauziah Md.Nor. 2008. Principles of Malaysian Land Law. Lexis
Nexis. p.255.
BRIEF FACTS

The first and second respondents are the registered proprietors of a propere borrowers made
defaults, the bank took steps to recover the loan and interest. The bank gave the borrowers seven
days' notice to remedy the default. That was the period prescribed in the annexure to the charge.
The notice was in Form 16D as required by Section 254(1) of the National Land Code. The
borrowers did not comply with the notice. Then, the bank commenced a foreclosure proceeding
before the land administrator. That was because the property is held under a Land Office title. The
land administrator allowed the bank's application and granted an order for the sale of the property
by public auction. After that, the borrowers took out an originating summons against the bank and
the land administrator. They claimed a declaration that the order for sale made by the land
administrator is null and void. The borrowers also prayed for certain consequential orders. The
learned judge who heard the summons granted the relief sought by the borrowers. Hence, the bank
appealed.

The borrowers argued that Section 254 of the National Land Code was enacted for the protection
of a chargee. A chargee cannot, therefore, contract out of the provisions of the section by agreeing
to a notice period of less than one month. As against these arguments, the bank contended that the
section permitted the parties to a charge to agree to any period less than a month.

ISSUE

Since the case was an appeal case, only one issue was discussed before the Court of appeal. The
appellant in the case Citibank (referred to as the bank) was not satisfied with the judgment brought
in this case and argued that the foreclosure proceedings commenced by the Bank were not null and
void. The main issue before the court is whether the wordings of Section 254(1)(b) that
stipulates “the period to pay the amount demanded in the notice of demand (Form 16D) to
be ‘within 1 month… or such alternative period as may be specified in the charge” is
annotating chargee may agree to accept a statutory notice of less than one month under NLC
or not.
DECISION

The appeal is allowed.

GROUNDS

The Court of Appeal formed the view that the lower court judge's interpretation of s 254(1) of
the Code was wrong. Applying the golden rule of construction interpretation, the court brought
up the intention of the Parliament enacted section 254(1) of the NLC compared to the previous
section, section 138(i)(a) which stated that a statutory notice to a chargor could not be less than
30 days. The court held that the words 'or such alternative period as may be specified in the
charge', is clearly intended to alter the law by enabling a chargee to impose a period of less
than a month.

OPINIONS

We agree with the decision made by the court. This is because, each of the strategies provided
takes a different approach to drafting a statute. If literal rule were to be used by the judge, then
that notice of 30 days will not be applicable as that approach is restricted and rigid. The literal
rule gives no heed to anything other than the statute's explicit language. The golden rule on the
other hand allows the judicial interpreter to fill in an omission in a statutory clause if the literal
approach leads to absurdity or injustice. We are in opinion that the existing of the word “or” in
phrase “or such alternative period as may be specified in the charge” shows that the date is open
for interpretation and not restricted to less then 30 days. The period “within one month” is not
enforceable as we believe that there is a flexibility provided in the section. The sentence is clearly
intended to enable the chargee to impose a period of less than a month. Hence, it is reasonable for
the court to apply the golden rule of construction interpretation, There is also the mischief rule, an
approach that examines the condition of the law at the time an Act was made to determine the
wrongdoing or flaw that Parliament is attempting to correct. Finally, there's the purposeful
approach, which involves refining the mischief rule. This necessitates a court's consideration of an
Act's aim. What's important is that all of these approaches are utilised to figure out what Parliament
was trying to say when it employed specific words in a statute. Despite the several methodologies
available, it is interesting that the purposive approach has risen to dominate the sector. In regard
to the service of notice, Section 431 mentioned that notice can be delivered by way of personal
delivery, by leaving the notice at the person’s last known address, pre-paid registered post, or
substituted service. Nevertheless, it is very important for the chargor to understand that the law
can be varies and not just literally what have been provided in the Act.

CONCLUSION

In conclusion, in order to satisfy the debt owed by the defaulted chargor on the charged land, a
notice of demand in the form 16D will be issued to the chargor within the stipulated time. The
decision in Citibank Bhd v Mohamad Khalid Bin Farzalur Rahaman & Ors showed that in order
to assess whether or not the notice in 16D was delivered too early, the court will consider the
stipulated time period by applying the relevant approach that is suitable in the situation and not
just restricted to what have been provided in the section. Hence, the court has the legal authority
to set a different minimum duration, as long as it is within the interpretation of the section.

REFERENCE

Ainul Jaria Maidin, Sharifah Zubaidah Syed Abdul Kader, Bashiran Begum Haji Mobarak Ali,
Nor Asiah Mohamad Azlinor Sufian, Ratna Azah Rosli, Fauziah Md.Nor. 2008. Principles
of Malaysian Land Law. Lexis Nexis.