CASE OF THE WEEK

The judgment creditor (JC) commenced bankruptcy proceedings against the judgment debtor (JD) vide a Bankruptcy Notice (BN) pursuant to a judgment obtained against the JD. There had been a previous Receiving Order (RO) and Adjudication Order (AO) which was annulled by consent. The second BN was only filed after six years from the date of the judgment and hence the JD asserted that leave should have been obtained first. The JD also raised the objection that interest could not be claimed since
the six years limitation period had expired. Other objections raised by the JD were, inter alia, the validity of service of the BN, the validity of the order for substituted service of the creditor's petition (CP), the wrong calculation of the amount outstanding in the BN, and the non-compliance with the relevant forms under the Bankruptcy Rules 1969 (BR). The JD's application to set aside substituted service of CP (encl. 18), application to set aside the BN (encl. 21) and application to set aside the CP (encl. 24) were dismissed and hence these appeals. The JD had relied on the ground that he is now residing in Singapore and that the substituted service of the CP was irregular and ought to be set aside.

Held (dismissing the JD's appeal with costs):

(1) Enclosure 18 was served on the JC five days before the hearing of the CP for the same reliefs and premised on similar grounds as encl. 16. In the absence of cogent reasons why the same application was filed twice and both with a similar pattern of last-minute service on the JC, the second filing was done in bad faith with a view to causing the hearing date of the CP to be postponed and was thus an abuse of the court's process. Further, the service of encl. 18 also did not comply with r. 20 of the Bankruptcy Rules 1969 and therefore ought to have been dismissed. (paras 13 & 19)

(2) There is no prohibition under the Bankruptcy Act 1967 (BA) and/or the Bankruptcy Rules 1969 against the filing of a CP against the JD domiciled in Singapore. Pursuant to ss. 3(3) and 5(1)(d) of the BA there was more than ample evidence that JD is a Malaysian citizen carrying on business in Malaysia. The address stated in the CP was the business address of Compusoft, of which JD was listed as director, and the same address where the BN was personally served on JD and was also where the letter of appointment to serve the CP had been sent and acknowledged. The JC also had the right to proceed with the proceedings in Malaysia pursuant to the Guarantee and Indemnity executed by the JD in favour of the JC. Hence, this also made the service of the BN not unusual and indeed it was normal to serve the BN at his place of business. (paras 29, 30, 31, 33 & 88)

(3) Enclosure 21 should also be struck out in limine for being an abuse of the process of the court as it sought the very same reliefs and were premised on the very same grounds as encl. 14 which had been withdrawn unconditionally and was struck out with costs. Although the JD requested for a long hearing date for the hearing of the CP to enable the JD to settle the matter amicably, no attempt to settle was made. Further, there was nothing in the order which said that it was struck out with liberty to file afresh and the JD thus did not have liberty to file afresh. (paras 44 & 47)

(4) It was not sufficient for the JD to show that his calculation of the sum owing according to the judgment was different but instead the JD must descend to the details to show where the error had arisen. Effect must also be given to s. 3(2)(ii) of the BA. The JD failed to challenge the sum required to be paid to avoid an act of bankruptcy within the seven days. Therefore, the application was made too late in the day. (paras 61 & 63)

(5) No leave of court was necessary to issue a BN after six years from the date of the judgment so long as the BN was issued within 12 years from the date of the judgment as in this present case; (Perwira Affin Bank Bhd v. Lim Ah Hee, refd). Moreover, the quantum stated in the BN was accurate and computed strictly in accordance with the judgment dated 16 April 2003. Following the decision of Perwira Affin Bank Bhd v. Lim Ah Hee on the interpretation of s. 6(3) of the Limitation Act 1953, the claim for interest made after six years period was valid. At the same time the JD was also estopped from raising limitation to the JC's action for the fact that he had induced the JC to annul the AO and RO obtained earlier. (paras 64, 69 & 75)

(6) The JD was not a bankrupt when the second bankruptcy proceedings was commenced. The JC had at all material times acted in good faith and complied strictly with the provisions and requirements of the BR and BA. In the premises, the bankruptcy proceedings were regular and in accordance with the law. (paras 99 & 100)

Case(s) referred to:

Alfred Templeton & Ors v. Mount Pleasure Corp Sdn Bhd [1989] 1 CLJ 693; [1989] 1 CLJ (Rep) 219 HC (refd)

Alliance Bank Malaysia Bhd v. Mukhriz Mahathir & Anor [2006] 2 CLJ 723 HC (refd)

Arab-Malaysian Finance Bhd v. Mohd Zakaria Salim [2002] 3 CLJ 530 CA (refd)

Barrets & Baird (Wholesale) Ltd v. IPCS (NLJ) 1988 357 (refd)

In Re Dato' Dr Elamaran M Sabapathy, ex p RHB Bank Bhd [2011] 10 CLJ 262 HC (refd)

In Re Abrahamson; Ex parte Crisp & Gunn Ltd 22 ALR 749 (refd)

In Re Gan Eng San; Ex p HSBC Bank Malaysia Bhd [2011] 3 CLJ 409 HC (refd)

Low Mun v. Chung Khiaw Bank Ltd [1987] 2 CLJ 400; [1987] CLJ (Rep) 172 SC (refd)

Per Yap Kin Ex Parte United Malayan Banking Corporation Berhad [1997] 3 CLJ Supp 56 HC (refd)

Perwira Affin Bank Bhd v. Lim Ah Hee [2004] 2 CLJ 787 FC (refd)

Perwira Habib Bank Malaysia Bhd v. Samuel Pakianathan Jabamanickam [1993] 3 CLJ 349 SC (refd)

Rabindera Singh Arjan Singh, Re: ex p; Malaysian International Merchant Bankers Bhd [1989] 2 CLJ 858; [1989] 2 CLJ (Rep) 395 HC (refd)

Re Abrahamson; Ex parte Crisp & Gunn Ltd 22 ALR 749 (refd)

Re Kho Kak Siew, ex p Mui Bank Bhd [1992] 1 LNS 9 HC (refd)

Re; Ti Hock Soon, Ex Parte Perwira Habib Bank Malaysia Berhad Dan Dua Lagi Kes [1993] 1 CLJ 477 HC (refd)

Sovereign General Insurance Sdn Bhd v. Koh Tian Bee [1988] 1 CLJ 155; [1988] 1 CLJ (Rep) 277 SC (refd)

Tan Kim Hai & Sons Enterprises Sdn Bhd & Ors v. Tan Kim San & Sons Sdn Bhd & Ors; Hiap Lee (Choong Leong & Sons) Brickmakers Sdn Bhd & Anor (Interveners) [1996] 2 BLJ 502 (refd)

United Malayan Banking Corporation Bhd v. Ernest Cheong Yong Yin [2002] 2 CLJ 413 FC (refd)

V David, Re: ex p; United Asian Bank Bhd [1991] 2 CLJ 1047; [1991] 2 CLJ (Rep) 543 HC (refd)

Yip Kim Khoon v. The Hongkong & Shanghai Banking Corp [1991] 2 CLJ 1631; [1991] 4 CLJ (Rep) 297 HC (refd)

Legislation referred to:

Bankruptcy Act 1967, ss. 3(1)(d), (i), (2)(ii), 3(3), 5(1)(d), 131

Bankruptcy Rules 1969, rr. 18, 20, 94(1)(b), 95, 97, 109, 110, 127

Evidence Act 1950, s. 114(g)

Interpretation Acts 1948 and 1967, ss. 62, 71

Legal Profession (Practice and Etiquette) Rules 1978, r. 12

Limitation Act 1953, ss. 2, 6(3)

Rules of the High Court 1980, O. 46 r. 2

Other source(s) referred to:

Bankruptcy Handbook (Handbook Series, Malayan Law Journal Sdn Bhd, 1998, p II 36

For the judgment debtor/appellant - E Cheah (Eric Lai & Parameswari with him); M/s Lai & Assocs

For the judgment creditor/respondent - Dato' M Pathmanathan (Shirin Pathmanathan with him); M/s M Pathmanathan & Co

Reported by Emm Zehra