Court auctions should not be made exclusively online, say Penang auctioneers

PETALING JAYA (Aug 30): Court auctions should not be made exclusively online on the e-Lelong platform. Instead, the Penang Auctioneers Association suggested that a dual-bidding mode for property auctions may be the way to go in order to increase the integrity of court auctions.

Association chairman and managing director of MNP Auctioneers (Central) Sdn Ltd Stephen Soon Chee Leng said both manual and online auctions have their own flaws and advantages, hence a better solution is to have it both ways.

The Chief Justice of Malaysia Tan Sri Md Raus Sharif had recently launched the e-Lelong pilot project at the Kuantan High Court on July 27.

e-Lelong is the judiciary’s digital initiative to bring court auctions of immovable properties online, in order to enhance transparency and minimise human intervention, according to the Chief Registrar's Office (CRO) of the Federal Court of Malaysia. 

Kuantan was chosen as the first stop for the pilot project as it is where the e-Lelong Operations Centre is located. The system will eventually be expanded to 14 other High Courts in Peninsular Malaysia. The portal (https://elelong.kehakiman.gov.my/BidderWeb) has gone live since June 1, 2017. 

“Is e-Lelong really the best replacement for manual auction of properties? Until today, two of the world’s most famous auction houses, Christies’ and Sotheby’s, are still conducting auctions manually and this has continued to help them set record-breaking auctions.

“These two auction giants conduct their auctions using both manual and online. Even as bidders are bidding at live events, the main platform, those from faraway places would have access to an online bidding platform.

“These two modes happening at the same time meant it is harnessing the benefits of accessibility for all — open and transparent at the same time.

“Bidders, whether those present at the live events or those bidding online, were competing for the same item, at the same time,” said Soon in a statement.

He added that a public auction should be open to as many bidders as possible. “If we limit it to only those with online access, this is no longer a ‘public auction’. I believe it could be called restriction with no liberty to bid.”

Soon also said properties to be auctioned deserve to be given a reasonable time to be marketed to reflect their real demand during an auction.

“With e-Lelong and without auctioneers, it will be like buying a property without any inspection, searches, consultation, guidance and advice. The court officers are well versed in court procedures but [they] certainly not the right people to guide buyers through a pleasant auction process.

“With the do-it-yourself process for e-Lelong, the entire risk falls on the bidder. This is unlike manual bidding where everyone could see for themselves what was really happening before their eyes.

Furthermore, he added, since the court will not be responsible for any disruption, delay, failure, mistake or loss of information that is submitted via the electronic platform, e-Lelong may not bring more benefits to the bidder.

On allegations of pricing manipulation at normal court auctions, Soon hopes that substantial evidence of this happening can be provided.

He also cited the National Land Code 1965, which stated that court auctions are managed, administered and controlled fully by the courts. “As such, how could pricing manipulation arise under the court system? What would be the purpose for such manipulation since the court is only conducting the auctions as a neutral party to all stakeholders?”

Soon also argued that e-Lelong may not attract more bidders as expected by the judiciary, as online shopping among Malaysians mostly revolves around consumer products.

“I am very sure the number of buyers purchasing online may increase, but seriously, I am not going to start my first online purchase with a property worth hundred thousands of ringgit. It will be hard for e-Lelong to attract a large participation from the general public for its 100% online auctions,” he said.

“Does it help the financial institutions when there are fewer bidders? Does it help the bidders who are non-internet users to own a house? Does it help distressed owners to reduce their financial burden if his property is not selling at the highest possible price?”