May 19, 2024

LIMITATION PERIOD FOR FORECLOSURE CHARGE ACTION

The Federal Court in a very recent case of Thameez Nisha Hasseem v Maybank Allied Bank Berhad [Civil Appeal No.02(f)-73-09/2019(P)] decided, inter alia, that:-
  • (a) The 12 year limitation period applies to charges under the NLC;
  • (b) The period of limitation in Section 21(1) of the Limitation Act begins from the date of the failure to repay the debt and not from the failure to remedy the 16D Statutory Notice (a complete departure from its decision in CIMB Bank Bhd v Sivadevi Sivalingam [2020] 1 MLJ 583.

It is to be highlighted that the Federal Court went on to discuss on the law on indefeasibility of title and held that as a result of limitation being effective, MABB’s charge in that case would be legally unenforceable. The following passage summarises the Federal Court’s stance:-

“[124] In effect, when a chargee fails to obtain an Order for Sale timeously or at all, or fail to file proceedings in court to obtain a valid and enforceable Order for Sale of the charged land within the limitation period as prescribed by section 21(1) of the LA 1953, a chargor is entitled to defeat the registered interest of the chargee pursuant to section 340(4)(b) of the NLC and consequently obtain the return of the land title pursuant to section 244(1) of the NLC read with Order 83 rule 1(1) of the ROC. We therefore answer the Main Question, Question 2 and Question 3 in the affirmative.”

As it stands, any chargee bank ought to be well aware that if a chargee bank sleeps on its rights for more than 12 years after a borrower/chargor fails to repay his/her loan, the charge can be deemed legally unenforceable by virtue of the Limitation Act. It follows too that the charged property may then be subject to an application for declaration for the charge to be struck out or removed from the title

Article By

NUR QISTINA & M NUR NASUTION

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