Land Purchased at A Public Auction – Can The Buyer then sue The Bank if it is discovered that The Land was smaller than what was stated in The Proclamation of Sale?
AMBANK [M] BERHAD v AIM EDITION SDN BHD [2022 2 MLRA 313]
- SAP Holdings Berhad the landowner of certain lands entered into a Joint Venture Agreement with Cergas Tegas Sdn Bhd [Cergas] to develop the said lands [the land].
- Cergas then entered into a loan agreement with AmBank [M] Berhad [AmBank]. By virtue of the JV Agreement with SAP, Cergas charged the land to Ambank.
- Cergas then defaulted in the loan agreement and AmBank successfully obtained an order to sell the land by way of auction.
- AIM Edition Sdn Bhd [AIM] successfully bidded for the land at the auction on 11 Nov 2016.
- After successfully bidding for the land, sometime in May 2017, AIM appointed surveyors to survey the land and discovered that the actual size of the did not accord with what was stated in the Proclamation of Sale at the auction.
- AIM then sued AmBank for breach of contract claiming that AmBank was in breach of a material term by not delivering what was contracted or promised.
- The High Court dismissed AIM’s claim but the Court of Appeal reversed the decision of the High Court.
- AmBank then appealed to the Federal Court.
FEDERAL COURT DECISION – APPEAL ALLOWED!
- The Federal Court held that given that the auction of the land was conducted pursuant to an order of Court, there was no contract between the AmBank and AIM, the successful bidder.
- Since this was a judicial sale [by way of a Court Order] it did not give rise to a contract between the bank and the successful bidder.