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Application
Pertinent to note the dates of entry for
both the prohibitory order and the charge
made on Lot 512.
Prohibitory order: 8 January 2015
Charge: 5 March 2015
Therefore, it is clear that the prohibitory
order was the first in time and shall
therefore be given priority.
Application of charge cannot be
approved.
Strength
Carries a strong ground for a judgmentdebtor to challenge a prohibitory order as
it is a preliminary statutory requirement
No prohibitory order shall take effect until it
has been entered by the Registrar
Application
At present, there is no mention as to whether
there is a procedural flaw with the prohibitory
order made by a creditor of Multimex Sdn Bhd.
Therefore, it is to be assumed that the prohibitory
order is effective as it has been properly
registered in the register document of title, and
thus section 335(1) may not be used to remove
the prohibitory order on Lot 512.
Strength
Although there is no specific provision that provide for
this, the strength of this ground for a removal of a
prohibitory order is assessed based on decided cases.
Karuppiah Chettiar v Subramaniam (1971) (FC): R
successfully set aside the prohibitory order on this
ground in HC, and this decision was upheld by the
Federal Court on appeal.
Paramoo v Zeno Ltd (1968) (FC): A lien-holder who
has obtained a lien over the land in dispute and a
judgment creditor who has entered a prohibitory
order in respect of the same land, will have priority
over the prohibitory order holder.
Application
Pertinent to note the dates of entry for both the
prohibitory order and the charge made on Lot
512.
Prohibitory order: 8 January 2015
Charge: 5 March 2015
Therefore, it is clear that the prohibitory order
was the first in time and shall therefore be given
priority.
Prohibitory order cannot be removed.
16
Statutory Remedies
NLC provides two remedies to a chargee in the
event the chargor fails to repay the loan.
A. Order for sale by way of public auction (s
253)
B. Taking possession of the charged property
(s 270)
17
18
Is an unregistered charge
recognized under Malaysian law?
Yes, by case law, the courts have accepted the
concept of an equitable charge.
Chuah Eng Khong v Malayan Banking (1998)
(FC)
held an equitable charge could exist as the NLC
does not have provisions which would render it null and
void
SZA
4/27/16
20
Legal Charge
1) Unregistered.
2) Chargee entitled to
3) Chargee has
indefeasible interest
over the charge.
1) Registered.
ISSUE 4: WHETHER A
LIEN HAS BEEN
CREATED.
What is lien?
The Halsbury Law of England defines lien as being, a
right in one man to retain that, which is in his
possession belonging to another man until certain
demands of the person in possession is satisfied.
There are two types of liens namely, statutory lien and
equitable liens; their differences fall in the elements
required to create them.
STAGE 2
The intention to
create a lien.
STAGE 3
The lodgement of
a lien-holders
caveat (LHC).
Assessing the will of the proprietor would vary from case to case.
When a company asset is to be made a security for a loan in favour of the
director, it is important to assess provisions within the Companys Act (CA)
Section 133(1) of the CA provides for what Harta Empat Sdn Bhd v Koperasi
Rakyat (1997) (CoA) dubs as being, a blanket prohibition towards security on
company assets for a director.
However, such prohibition may be lifted when a prior approval is obtained in
the security in a general meeting as per Section 131(2). This means that after
such approval is obtained, a security on company assets for a loan issued in
favour of the director may be issued.