SCOTT & ENGLISH (MALAYSIA) SDN BHD. vs LING CHICK NGAI (MJLR2009a20) Ravinthran,SS
[29-253-2007-I]
1
MALAYSIA
IN THE HIGH COURT IN SABAH AND SARAWAK
AT KUCHING
BANKRUPTCY PROCEEDINGS NO. 29-253-2007-I
5
BETWEEN
SCOTT & ENGLISH (MALAYSIA)
SDN BHD. (Company No. 9572-M) … APPELLANT/CREDITOR
10 AND
LING CHICK NGAI
(BIC K.153591) … RESPONDENT/DEBTOR
JUDGMENT
15
This is an appeal from the decision of the Senior Assistant Registrar (SAR) to
set aside the bankruptcy petition presented by the creditor on 4th January 2008.
Background facts
The creditor obtained judgment against the debtor in the Sessions Court on 28th 20
October 2005 for the sum of RM129, 200.00. The appeal by the debtor against
the said decision and an appeal for stay of execution failed. An appeal to the
Court of Appeal is still pending at present time. On 29th June 2007, the creditor
served a bankruptcy notice on the debtor. The debtor filed an affidavit
(enclosure 9) that purported to dispute the bankruptcy notice on 4th 25 July 2007.
Subsequently on 19th July 2007 and 8th August, 2007, two further affidavits in
opposition were filed by the debtor. The SAR did not rule on enclosure (9) and
there was no letter from the debtor requesting for a hearing date either. On 4th
January 2008, the creditor filed a bankruptcy petition and served it on the debtor
on 15th 30 February 2008. The debtor then sprung into action to challenge the
bankruptcy proceedings by filing a summons in chambers (enclosure 31) under
[29-253-2007-I]
2
Rule 18 to set aside the petition. He also filed a Notice by Debtor of Intention
to oppose Petition under rule 117.
The learned SAR heard the summons in chambers and set aside the creditor’s
petition. Only one reason was given by the learned SAR in 5 her brief written
ruling. It is as follows. Counsel for debtor submitted that the affidavit dated 4th
July 2007 operated as an application to set aside the bankruptcy notice but as it
was never heard by the then SAR, he argued that no act of bankruptcy was
committed. This argument found favour with the learned SAR who ruled the
10 bankruptcy petition was prematurely presented. The instant appeal is against
this decision.
When a creditor may present a petition?
Section 5 of the Bankruptcy Act 1967 provides that four conditions must be
15 satisfied before a creditor may present a bankruptcy petition, i.e. the debt must
amount to RM30,000, it must be a liquidated debt payable immediately or a
some certain future time, the act of bankruptcy must have occurred within six
months before the presentation of the petition and that the debtor is domiciled
in Malaysia or has resided there or carried on business within a year.
20
In this instant appeal, the counsel for debtor argued that no act of bankruptcy
upon which the petition is grounded was committed within six months of the
presentation of the petition. He repeated the same argument that he made
before the SAR.
25
Whether the affidavit (encl 9) amounted to an application to challenge the
bankruptcy notice?
Case law is settled on the point when an affidavit may operate as an application
to challenge a bankruptcy notice. For sake of convenience, I shall first
[29-253-2007-I]
3
reproduce the relevant statutory provisions. Section 3(1)(i) of the Bankruptcy
Act provides that a debtor would have committed an act of bankruptcy if he
cannot:
“….satisfy the court that he has a counter-claim, set off or cross demand
which equals or exceeds the amount of the judgment debt 5 or sum ordered to
be paid and which he could not set up in the action in which the judgment was
obtained or in the proceedings in which the order was obtained”.
Rule 95 of the Bankruptcy Rules 1969 reads as follows:
10 “95 Application to set aside
(1) The filing of an affidavit shall operate as an application to set aside the
bankruptcy notice, and thereupon the Registrar shall fix a day for hearing the
application, and shall give not less than three clear days' notice thereof to the
debtor, the creditor and their respective solicitors, if known.
15 (2) If the application cannot be heard before the time specified in the notice
for compliance with its requirements, the Registrar shall extend the time, and
no act of bankruptcy shall be deemed to have been committed under the notice
until the application has been heard and determined.”
20 Rule 94 reads as follows:
“94 Particulars to be endorsed on notice
(1) Every bankruptcy notice shall be endorsed with-
(a) the name and place of business of the solicitor who is suing out the notice,
or if no solicitor is employed, with a memorandum that it is sued out by the
25 creditor in person;
(aa) the name and National Registration Identity Card number of the debtor.
(b) an intimation to the debtor that if he has any counter-claim, set off or cross
demand which equals or exceeds the amount of the judgment debt, and which
he could not have set up in the action in which the judgment or order was
30 obtained, he must within the time specified in the notice file an affidavit to
that effect with the Registrar.
(2) In the case of a notice served in the Federation the time shall be seven
days. In the case of a notice served elsewhere the Registrar when issuing the
notice shall fix the time.”
[29-253-2007-I]
4
In the often cited case of Datuk Lim Kheng Kimv Malayan Banking Bhd [1993]
2 MLJ 298, the Supreme Court considered all the above provisions and held that
an affidavit cannot operate as an application to set aside a bankruptcy notice
unless it is within the contemplation of s 3(1)(i) of the Act. In other words, if
the debtor wishes to challenge a bankruptcy notice by way of 5 affidavit, he must
within seven days file an affidavit to satisfy the court that he has a counterclaim,
set off or cross demand which equals or exceeds the amount of the
judgment debt. In the instant case, the affidavit in question raised the
following:
10 1. That the debtor was no longer trading as sole proprietor under the firm name.
2. That the sum of interest was calculated based on 560 days and not 559 days.
3. That the bankruptcy notice is premature as costs had not been taxed.
4. That an appeal is pending before the Court of Appeal against judgment in question.
15 As can been observed, the debtor utterly failed to raise a challenge to the
bankruptcy notice that is within the contemplation of section 3(1)(i) of the
Bankruptcy Act 1967. Counsel for the debtor submitted that the SAR did not
fix a hearing date to consider the said affidavit which purports to challenge the
bankruptcy notice and therefore no act of bankruptcy was committed.
20 However, in my opinion, following the Supreme Court case of Datuk Lim
Kheng Kim v Malayan Banking Bhd [1993] 2 MLJ 298, the affidavit of the
debtor cannot operate as an application to set aside the bankruptcy notice. It
must also be noted that the said affidavit did not comply with the prescribed
statutory Form 7 for an affidavit under Rule 95. The statutory form requires the
25 debtor to state the counter claim, cross demand or set off. In the premises, said
affidavit cannot be considered as an application under Rule 95. Therefore the
failure of the SAR to fix a hearing date to consider the affidavit did not bring
into operation the deeming provision of Rule 95(2) which says that:
“and no act of bankruptcy shall be deemed to have been committed under the
30 notice until the application has been heard and determined.”
[29-253-2007-I]
5
This case should be treated as if no affidavit under Rule 95 was filed. The
failure of the SAR to consider the affidavit of the debtor did not stop time from
running against him in respect of the seven days period given to him to satisfy
the judgment debt upon receipt of the service of the bankruptcy notice. This
point is covered by a direct authority that was not cited by the 5 parties. In the
case of Re Tan Hwee Earn; ex p The People's Insurance Co (M) Sdn Bhd
[1999] 4 MLJ 248, the debtor had filed an affidavit purporting to be an
application to set aside the bankruptcy notice under Rule 95. The affidavit
however did not allude to any counterclaim, cross demand or set off of the
10 debtor. This application was not heard until after the presentation of the
creditor petition. The debtor argued that the presentation of the creditor petition
was premature as the application to set aside the bankruptcy notice was not
heard yet. This argument was dismissed by Steve Shim J in the following
words:
15 “In canvassing the third ground, counsel for the debtor has submitted that the
CP was premature. It is his contention that at the time the CP was presented,
the debtor had already filed an application to set aside the BN within the
seven-day period prescribed by r 95 Bankruptcy Rules and therefore no act of
bankruptcy was deemed to have been committed under the notice until the
20 said application had been heard and determined. This point was indirectly
raised by counsel for the debtor in his appeal earlier. Therein, I held that
because of his failure to comply with the provisions of s 3(1) and (2) of the
Act read with r 95 of the Rules, it must be treated as if no application by way
of affidavit had been made. The so-called application by way of summons-in25
chambers was therefore a non-starter. In the circumstances, I hold that the
third ground has no merit whatsoever.”
I shall respectfully follow the above decision as it fully accords with the
reasoning in the Supreme Court decision in Datuk Lim Kheng Kim v Malayan
30 Banking Bhd [1993] 2 MLJ 298. In the above case as well as this instant one,
the purported application under Rule 95 was a non-starter and therefore the
[29-253-2007-I]
6
debtor committed an act of bankruptcy after the lapse of seven days from the
time he was served with the bankruptcy notice.
The debtor, in his summons in chambers, did not attack the creditor petition on
any other ground. Nonetheless, I shall consider the four grounds 5 that he raised
in the purported Rule 95 affidavit to set aside the bankruptcy notice. The first
ground is that the debtor was no longer trading under his firm name. That is
irrelevant as the bankruptcy notice is not directed at the firm as a separate entity
but at the debtor personally. The second ground is that the interest was
10 calculated for 560 days instead of 559 days. This ground has no merit as
Counsel for petitioner has demonstrated in the affidavit in opposition the
number of days between the date of judgment and bankruptcy notice is 560
days. Counsel for debtor conceded the point during argument. The third
ground is that the bankruptcy notice is premature as costs had not been taxed.
15 This point is without merit as costs can be proved in bankruptcy at a later date
and there is no bar to the issuance of a bankruptcy notice or presentation of a
creditor petition (see Low Mun v Chung Khiaw Bank Ltd [1988] 1 MLJ 263
and Re Wah Hai Hing; ex p Choong Wai Wah & Anor [1999] 5 MLJ 651). In
Low Mun v Chung Khiaw Bank Ltd [1988] 1 MLJ 263, Mohamed Azmi SCJ
20 said as follows:
“As regards costs, where a judgment is obtained for a certain sum and costs to
be taxed, a bankruptcy notice can be issued for the amount of the judgment
without the costs — see Re GJ, Ex parte GJ [1905] 2 KB 678 CA.”
25 The fourth ground is that an appeal is pending before the Court of Appeal in
respect of the judgment of the Sessions Court. This point is without merit also
as the debtor failed to obtain a stay of execution. The judgment in question is a
final judgment and a pending appeal against it cannot constitute an impediment
to issuance of a bankruptcy notice or operate as a stay of bankruptcy
[29-253-2007-I]
7
proceedings (see Re Tan Ah Poi; ex p Multi-Purpose Finance Bhd [1999] 2
MLJ 555).
In conclusion, I respectfully disagree with decision of the learned SAR in
setting aside the creditor’s petition as there was no proper 5 application to set
aside the bankruptcy notice under Rule 95. By the time the present application
was filed under Rule 18, the debtor had already committed the act of bankruptcy
and the creditor had presented the creditor’s petition within time. The creditor’s
petition was therefore not prematurely presented as found by the learned SAR.
10 The other grounds advanced in the purported affidavit to set aside and repeated
during argument are all without merit.
I will now consider the creditor petition and the Notice of Intention to Oppose
petition which was fixed for hearing at the same time as the summons in
15 chambers to set aside the creditor’s petition. I agree with counsel for the
creditor that the said Notice is flawed. Section 117 of the Bankruptcy Rules
says that the Notice should specify the statements in the petition that the debtor
intends to deny or dispute. The Notice of Intention to Oppose in question
completely failed to do that. It merely stated that the debtor intends to oppose
20 the making of a receiving order without specifying any statement in the creditor
petition that he intends to object. I shall therefore allow this appeal with costs
and make a receiving and an adjudication order against the debtor.
25
(TUAN RAVINTHRAN PARAMAGURU)
Judicial Commissioner
30 Date of Delivery of Judgment: 5.2.2009
[29-253-2007-I]
8
Date of Hearing: 20.1.2009
29.1.2009
4.2.2009
5 5.2.2009
For Appellant /Creditor: Ms Susan Gau
Messrs Chan & Gan Advocates
Kuching
10
For Respondent/Debtor: Mr. Gordon Tang
Messrs Chew, Jugah, Wan Ullok & Co.
Advocates,
Kuching
15
20
25
30
35
40
Notice: This copy of the Court's Reasons for Judgment is subject to
typographical revision.
1
MALAYSIA
IN THE HIGH COURT IN SABAH AND SARAWAK
AT KUCHING
BANKRUPTCY PROCEEDINGS NO. 29-253-2007-I
5
BETWEEN
SCOTT & ENGLISH (MALAYSIA)
SDN BHD. (Company No. 9572-M) … APPELLANT/CREDITOR
10 AND
LING CHICK NGAI
(BIC K.153591) … RESPONDENT/DEBTOR
JUDGMENT
15
This is an appeal from the decision of the Senior Assistant Registrar (SAR) to
set aside the bankruptcy petition presented by the creditor on 4th January 2008.
Background facts
The creditor obtained judgment against the debtor in the Sessions Court on 28th 20
October 2005 for the sum of RM129, 200.00. The appeal by the debtor against
the said decision and an appeal for stay of execution failed. An appeal to the
Court of Appeal is still pending at present time. On 29th June 2007, the creditor
served a bankruptcy notice on the debtor. The debtor filed an affidavit
(enclosure 9) that purported to dispute the bankruptcy notice on 4th 25 July 2007.
Subsequently on 19th July 2007 and 8th August, 2007, two further affidavits in
opposition were filed by the debtor. The SAR did not rule on enclosure (9) and
there was no letter from the debtor requesting for a hearing date either. On 4th
January 2008, the creditor filed a bankruptcy petition and served it on the debtor
on 15th 30 February 2008. The debtor then sprung into action to challenge the
bankruptcy proceedings by filing a summons in chambers (enclosure 31) under
[29-253-2007-I]
2
Rule 18 to set aside the petition. He also filed a Notice by Debtor of Intention
to oppose Petition under rule 117.
The learned SAR heard the summons in chambers and set aside the creditor’s
petition. Only one reason was given by the learned SAR in 5 her brief written
ruling. It is as follows. Counsel for debtor submitted that the affidavit dated 4th
July 2007 operated as an application to set aside the bankruptcy notice but as it
was never heard by the then SAR, he argued that no act of bankruptcy was
committed. This argument found favour with the learned SAR who ruled the
10 bankruptcy petition was prematurely presented. The instant appeal is against
this decision.
When a creditor may present a petition?
Section 5 of the Bankruptcy Act 1967 provides that four conditions must be
15 satisfied before a creditor may present a bankruptcy petition, i.e. the debt must
amount to RM30,000, it must be a liquidated debt payable immediately or a
some certain future time, the act of bankruptcy must have occurred within six
months before the presentation of the petition and that the debtor is domiciled
in Malaysia or has resided there or carried on business within a year.
20
In this instant appeal, the counsel for debtor argued that no act of bankruptcy
upon which the petition is grounded was committed within six months of the
presentation of the petition. He repeated the same argument that he made
before the SAR.
25
Whether the affidavit (encl 9) amounted to an application to challenge the
bankruptcy notice?
Case law is settled on the point when an affidavit may operate as an application
to challenge a bankruptcy notice. For sake of convenience, I shall first
[29-253-2007-I]
3
reproduce the relevant statutory provisions. Section 3(1)(i) of the Bankruptcy
Act provides that a debtor would have committed an act of bankruptcy if he
cannot:
“….satisfy the court that he has a counter-claim, set off or cross demand
which equals or exceeds the amount of the judgment debt 5 or sum ordered to
be paid and which he could not set up in the action in which the judgment was
obtained or in the proceedings in which the order was obtained”.
Rule 95 of the Bankruptcy Rules 1969 reads as follows:
10 “95 Application to set aside
(1) The filing of an affidavit shall operate as an application to set aside the
bankruptcy notice, and thereupon the Registrar shall fix a day for hearing the
application, and shall give not less than three clear days' notice thereof to the
debtor, the creditor and their respective solicitors, if known.
15 (2) If the application cannot be heard before the time specified in the notice
for compliance with its requirements, the Registrar shall extend the time, and
no act of bankruptcy shall be deemed to have been committed under the notice
until the application has been heard and determined.”
20 Rule 94 reads as follows:
“94 Particulars to be endorsed on notice
(1) Every bankruptcy notice shall be endorsed with-
(a) the name and place of business of the solicitor who is suing out the notice,
or if no solicitor is employed, with a memorandum that it is sued out by the
25 creditor in person;
(aa) the name and National Registration Identity Card number of the debtor.
(b) an intimation to the debtor that if he has any counter-claim, set off or cross
demand which equals or exceeds the amount of the judgment debt, and which
he could not have set up in the action in which the judgment or order was
30 obtained, he must within the time specified in the notice file an affidavit to
that effect with the Registrar.
(2) In the case of a notice served in the Federation the time shall be seven
days. In the case of a notice served elsewhere the Registrar when issuing the
notice shall fix the time.”
[29-253-2007-I]
4
In the often cited case of Datuk Lim Kheng Kimv Malayan Banking Bhd [1993]
2 MLJ 298, the Supreme Court considered all the above provisions and held that
an affidavit cannot operate as an application to set aside a bankruptcy notice
unless it is within the contemplation of s 3(1)(i) of the Act. In other words, if
the debtor wishes to challenge a bankruptcy notice by way of 5 affidavit, he must
within seven days file an affidavit to satisfy the court that he has a counterclaim,
set off or cross demand which equals or exceeds the amount of the
judgment debt. In the instant case, the affidavit in question raised the
following:
10 1. That the debtor was no longer trading as sole proprietor under the firm name.
2. That the sum of interest was calculated based on 560 days and not 559 days.
3. That the bankruptcy notice is premature as costs had not been taxed.
4. That an appeal is pending before the Court of Appeal against judgment in question.
15 As can been observed, the debtor utterly failed to raise a challenge to the
bankruptcy notice that is within the contemplation of section 3(1)(i) of the
Bankruptcy Act 1967. Counsel for the debtor submitted that the SAR did not
fix a hearing date to consider the said affidavit which purports to challenge the
bankruptcy notice and therefore no act of bankruptcy was committed.
20 However, in my opinion, following the Supreme Court case of Datuk Lim
Kheng Kim v Malayan Banking Bhd [1993] 2 MLJ 298, the affidavit of the
debtor cannot operate as an application to set aside the bankruptcy notice. It
must also be noted that the said affidavit did not comply with the prescribed
statutory Form 7 for an affidavit under Rule 95. The statutory form requires the
25 debtor to state the counter claim, cross demand or set off. In the premises, said
affidavit cannot be considered as an application under Rule 95. Therefore the
failure of the SAR to fix a hearing date to consider the affidavit did not bring
into operation the deeming provision of Rule 95(2) which says that:
“and no act of bankruptcy shall be deemed to have been committed under the
30 notice until the application has been heard and determined.”
[29-253-2007-I]
5
This case should be treated as if no affidavit under Rule 95 was filed. The
failure of the SAR to consider the affidavit of the debtor did not stop time from
running against him in respect of the seven days period given to him to satisfy
the judgment debt upon receipt of the service of the bankruptcy notice. This
point is covered by a direct authority that was not cited by the 5 parties. In the
case of Re Tan Hwee Earn; ex p The People's Insurance Co (M) Sdn Bhd
[1999] 4 MLJ 248, the debtor had filed an affidavit purporting to be an
application to set aside the bankruptcy notice under Rule 95. The affidavit
however did not allude to any counterclaim, cross demand or set off of the
10 debtor. This application was not heard until after the presentation of the
creditor petition. The debtor argued that the presentation of the creditor petition
was premature as the application to set aside the bankruptcy notice was not
heard yet. This argument was dismissed by Steve Shim J in the following
words:
15 “In canvassing the third ground, counsel for the debtor has submitted that the
CP was premature. It is his contention that at the time the CP was presented,
the debtor had already filed an application to set aside the BN within the
seven-day period prescribed by r 95 Bankruptcy Rules and therefore no act of
bankruptcy was deemed to have been committed under the notice until the
20 said application had been heard and determined. This point was indirectly
raised by counsel for the debtor in his appeal earlier. Therein, I held that
because of his failure to comply with the provisions of s 3(1) and (2) of the
Act read with r 95 of the Rules, it must be treated as if no application by way
of affidavit had been made. The so-called application by way of summons-in25
chambers was therefore a non-starter. In the circumstances, I hold that the
third ground has no merit whatsoever.”
I shall respectfully follow the above decision as it fully accords with the
reasoning in the Supreme Court decision in Datuk Lim Kheng Kim v Malayan
30 Banking Bhd [1993] 2 MLJ 298. In the above case as well as this instant one,
the purported application under Rule 95 was a non-starter and therefore the
[29-253-2007-I]
6
debtor committed an act of bankruptcy after the lapse of seven days from the
time he was served with the bankruptcy notice.
The debtor, in his summons in chambers, did not attack the creditor petition on
any other ground. Nonetheless, I shall consider the four grounds 5 that he raised
in the purported Rule 95 affidavit to set aside the bankruptcy notice. The first
ground is that the debtor was no longer trading under his firm name. That is
irrelevant as the bankruptcy notice is not directed at the firm as a separate entity
but at the debtor personally. The second ground is that the interest was
10 calculated for 560 days instead of 559 days. This ground has no merit as
Counsel for petitioner has demonstrated in the affidavit in opposition the
number of days between the date of judgment and bankruptcy notice is 560
days. Counsel for debtor conceded the point during argument. The third
ground is that the bankruptcy notice is premature as costs had not been taxed.
15 This point is without merit as costs can be proved in bankruptcy at a later date
and there is no bar to the issuance of a bankruptcy notice or presentation of a
creditor petition (see Low Mun v Chung Khiaw Bank Ltd [1988] 1 MLJ 263
and Re Wah Hai Hing; ex p Choong Wai Wah & Anor [1999] 5 MLJ 651). In
Low Mun v Chung Khiaw Bank Ltd [1988] 1 MLJ 263, Mohamed Azmi SCJ
20 said as follows:
“As regards costs, where a judgment is obtained for a certain sum and costs to
be taxed, a bankruptcy notice can be issued for the amount of the judgment
without the costs — see Re GJ, Ex parte GJ [1905] 2 KB 678 CA.”
25 The fourth ground is that an appeal is pending before the Court of Appeal in
respect of the judgment of the Sessions Court. This point is without merit also
as the debtor failed to obtain a stay of execution. The judgment in question is a
final judgment and a pending appeal against it cannot constitute an impediment
to issuance of a bankruptcy notice or operate as a stay of bankruptcy
[29-253-2007-I]
7
proceedings (see Re Tan Ah Poi; ex p Multi-Purpose Finance Bhd [1999] 2
MLJ 555).
In conclusion, I respectfully disagree with decision of the learned SAR in
setting aside the creditor’s petition as there was no proper 5 application to set
aside the bankruptcy notice under Rule 95. By the time the present application
was filed under Rule 18, the debtor had already committed the act of bankruptcy
and the creditor had presented the creditor’s petition within time. The creditor’s
petition was therefore not prematurely presented as found by the learned SAR.
10 The other grounds advanced in the purported affidavit to set aside and repeated
during argument are all without merit.
I will now consider the creditor petition and the Notice of Intention to Oppose
petition which was fixed for hearing at the same time as the summons in
15 chambers to set aside the creditor’s petition. I agree with counsel for the
creditor that the said Notice is flawed. Section 117 of the Bankruptcy Rules
says that the Notice should specify the statements in the petition that the debtor
intends to deny or dispute. The Notice of Intention to Oppose in question
completely failed to do that. It merely stated that the debtor intends to oppose
20 the making of a receiving order without specifying any statement in the creditor
petition that he intends to object. I shall therefore allow this appeal with costs
and make a receiving and an adjudication order against the debtor.
25
(TUAN RAVINTHRAN PARAMAGURU)
Judicial Commissioner
30 Date of Delivery of Judgment: 5.2.2009
[29-253-2007-I]
8
Date of Hearing: 20.1.2009
29.1.2009
4.2.2009
5 5.2.2009
For Appellant /Creditor: Ms Susan Gau
Messrs Chan & Gan Advocates
Kuching
10
For Respondent/Debtor: Mr. Gordon Tang
Messrs Chew, Jugah, Wan Ullok & Co.
Advocates,
Kuching
15
20
25
30
35
40
Notice: This copy of the Court's Reasons for Judgment is subject to
typographical revision.
