Limitation Period – For Applications After Order For Sale
A recent Court of Appeal decision sent waves of consternation amongst financial institutions, when the Court decided that a bank was time-barred from pursuing any further applications to fix a fresh auction date, on the basis that limitation had set in more than 12 years AFTER the date of the Order for Sale.
In the case of RHB Bank Berhad v Dato’ Haji Muhammad bin Hamzah, the bank had attempted numerous times to realise land charged to it through court-conducted auctions but the auctions were all unsuccessful due to lack of bidders.
The chargor then applied in the charge action for an order that the bank could no longer file any further application for a new auction date to be fixed, on the basis that limitation had set in as more than 12 years after the Order for Sale had lapsed.
The Court of Appeal, on 5.7.2018, agreed with the chargor and relied on sections 21(1) and 6(3) of the Limitation Act 1953 in so deciding.
This is the first time the Court has declared that the limitation period would preclude further applications AFTER the Order for Sale had been granted.
Shook Lin and Bok took over the matter and on 28.11.2018, obtained leave to appeal from the Federal Court.
In view of the recent wave of decisions from the Court of Appeal where financial institutions have been found to be time-barred in their realisation of charge actions, the Federal Court has agreed to hear this appeal together with an earlier appeal pending before it, i.e., the case of CIMB Bank Berhad v Sivadevi A/P Sivalingam.
Keep an eye on this space for further developments.
If you have any queries arising from the above developments, please do not hesitate to get in touch with our team.
| Yoong Sin Min
Partner |
Heng Chia Leng
Senior Associate |