As you know, one of the issues which has constantly plagued the banking industry is whether a bank can still proceed to realise assignments over rights to land by a private sale, AFTER the individual title has been issued, without having to perfect a land charge over the individual title first.
This issue was decided by the Federal Court when it delivered its decision this Monday, 7.4.2015.
In a case of Damai Freight (M) Sdn. Bhd. vs Affin Bank Berhad, the Bank concerned was sued by the owner of the lease to land, when the Bank sold by private auction the lease over land, without knowing that the title deed to the same was already issued.
The High Court had ruled in favour of the owner and held that the Bank would need to create a charge over the land to realise the security and could not have proceeded to sell pursuant to its rights as assignee.
The matter was brought to the Court of Appeal, the Bank secured the reversal of the High Court decision.
After the owner/Borrower was granted leave to appeal to the Federal Court, the full hearing of the appeal took place last year before the Federal Court.
The Federal Court's decision was delivered this week on 7.4.2015.
In a nutshell, the Federal Court dismissed the Borrower's appeal and recognised that the assignee Bank was effectively selling a chose in action (rights to the lease/land) and such security continued even if the individual title deed has been issued. The assignee Bank was thus still fully entitled to sell such chose in action (rights to the lease/land) without having to perfect a land charge over the individual title.
This is also permissible, as there was nothing in the loan agreement/assignment which compelled the Bank to proceed to take a charge over the title, before it could realise the security.
Last edited 11 April 2015
