Federal Court holds judicial sale of land under section 257 of the NLC does not give rise to contractual relationship between chargee and successful bidder

20 January 2022

AmBank (M) Berhad v Aim Edition Sdn Bhd [2021] 1 LNS 2082

In AmBank (M) Berhad v Aim Edition Sdn Bhd, the respondent sued the appellant bank for a purported shortfall in the size of the land that it had purchased at a public auction. The primary issue in this appeal is whether there is a contractual relationship between the chargee bank and a successful bidder in a judicial sale pursuant to section 257 of the National Land Code 1965 (“NLC”), so as to constitute a cause of action.

The Federal Court held as follows:

• The chargee, which enjoys a specific remedy under section 253 of the NLC which is the statutory right to an order for sale so as to satisfy the charge in the event of a default or breach of the agreement relating to the charge, is not capable of passing title of the property concerned as that remains with the owner of the property.
• There is no contract between the chargee bank and the successful bidder, given that the judicial sale of the subject lands is conducted pursuant to an order of Court granted after the Court was satisfied that the conditions for such an order had been met.
• The remedy for an order for sale is expressly provided by statute and there is no reason or need to fit such remedy into the confines of the Contracts Act 1950.