Chapter 16 - Statutory Notice of Demand

Question 1

STATUTORY NOTICE

Overview

Answer 1

1) Minimum amount
2) Liquidated sum
3) Interest
4) Service of notice
5) Substantially disputed debt
6) Failure to specify limb
7) Exceeding amount stated

Question 2

STATUTORY NOTICE

Minimum amount

Answer 2

S.466:

• Normal threshold: RM10k
• Normal response notice time: 21 days
• COVID threshold: RM50k
• COVID response notice time: 6 months, i.e. a debtor company now has six months to respond to a statutory demand.

Question 3

STATUTORY NOTICE

Liquidated sum

Answer 3

Ng Ah Kway v Tai Kit Enterprise Sdn Bhd:

The amount stipulated in the notice must be liquidated sum.

Question 4

STATUTORY NOTICE

The law - what interest can be claimed

Answer 4

Wangsini SB v Grand United Holdings Bhd:

• The petitioning creditor is only legally entitled to claim interest on the judgment sum for 6 years from the date on which the interest was stated to commence.
• If the judgment had been silent on the issue of interest, then the statutory rate of 8% pa would apply for six years from the date of the judgment.

Question 5

STATUTORY NOTICE

Interest - failure to quantify

Answer 5

Malaysia Air Charter Co SB v Petronas:

• failure to quantify the interest due on the judgment will not invalidate the notice.

Question 6

STATUTORY NOTICE

Interest - time-barred interest

Answer 6

Wangsini SB v Grand United Holdings Bhd:

• where notice includes time-barred interest, it is a bad notice.
• subsequently, the petition had to be dismissed since the amount stated in the notice exceeded the amount actually due.

Question 7

STATUTORY NOTICE

Service of notice - the law

Answer 7

S.466(1)(a):

• service can be effected by leaving the notice at the registered office of the company.
  r. 18 Companies WUR:
• notice shall be deemed to be sufficiently served if left at or sent by prepaid post to the last known address of the person to be served therewith or the address (if any) at which the person has authorized service on him to be effected; and
• the notice if sent by prepaid post shall be considered as served at the time that the same ought to be delivered in the ordinary course of post and notwithstanding the same may be returned by the post office;
• no service shall be deemed invalid by reason that the name or any of the names other than the surname of the person to be served has been omitted from the document containing the person’s name if the Court is satisfied that in other respects the service of the document has been sufficient;
• when the solicitor for a party to be served accepts service of a document on behalf of that party and endorses the original or a copy thereof to that effect that service shall be deemed sufficient.

Question 8

STATUTORY NOTICE

Service at registered address - how to find registered address

FC, 2017

Answer 8

Siti Nur Aishah Ishak v Golden Plus Holdings Bhd:

• The appellant was entitled to rely on statutory and official records containing the debtor’s address.
• The information sourced from SSM were official searches;
• The public, including the creditor, must reasonably be allowed to rely on unless it was shown that the information contained therein was patently false or outdated.

Question 9

STATUTORY NOTICE

Service at registered address - Whether personal service required

HC, 2017

Answer 9

Teguh Amani Sdn Bhd v. Yongvic Sdn Bhd

• it does not have to be personal service of the notice.
• itcan be left at the registered office by a postal worker or courier just as it may be left at the registered office by a solicitor’s dispatch clerk or the Petitioner’s employee, servant or agent.
• ‘Leaving at registered office’ is a wider mode of service which would include ‘sending by registered post’.
• There ought not to be a distinction between leaving a copy at registered office by a postal officer and by a dispatch clerk of the Petitioner.

Question 10

STATUTORY NOTICE

Proof of service

HC, 2017

Answer 10

Teguh Amani Sdn Bhd v Yongvic Sdn Bhd:

• The Petitioner company would have to use someone to deliver or leave the notice at the Respondent’s registered address.
• Adequate proof of physical delivery of the notice is more important than the mode by which it is done.
• There ought not to be a distinction between leaving a copy at registered office by a postal officer and by a dispatch clerk of the Petitioner.

Question 11

STATUTORY NOTICE

Substantially disputed debt - overview

Answer 11

1) Meaning of disputed debt
2) Effect of disputed debt on petitioner
3) Effect of disputed debt on the issuance of notice
4) Effect of disputed debt on the issuance of petition

Question 12

STATUTORY NOTICE

Substantially disputed debt - meaning of disputed debt

Answer 12

Bank Utama (Malaysia) Bhd v GKM Amal Bhd:

• A disputed debt, in the context of a winding-up petition, is a debt in respect of which it is shown, with grounds supported by evidence, that there is a bona fide dispute

Question 13

STATUTORY NOTICE

Substantially disputed debt - effect of disputed debt on petitioner

Answer 13

Jurupakat Sdn Bhd v Kumpulan Good Earth Sdn Bhd:

• when the debt is substantially disputed, the petitioner is not a creditor within the meaning envisaged in s. 217 of the (previous) Companies Act;
• Therefore, he is not entitled to issue the statutory notice or to file the petition in the present case as it had no locus standi to do so.

Question 14

STATUTORY NOTICE

Substantially disputed debt - effect of disputed debt on issuance of notice

Answer 14

Issuance of notice is an abuse of process

Question 15

STATUTORY NOTICE

Substantially disputed debt - effect of disputed debt on issuance of petition

Answer 15

Sri Hartamas Development Sdn Bhd v MBF Finance Bhd:

• The notice must relate to a specified debt whose amount or existence cannot be seriously questioned.
• Where the amount is questionable or suspect and there is no judgment sum to support it, the petition should be dismissed.

Re Ban Hong Co Ltd:

• A petition instituted for the purpose of enforcing a disputed debt is an abuse of process;
• It will dismissed with costs.

Question 16

STATUTORY NOTICE

Substantially disputed debt - example - counterclaim or set-off

Answer 16

Pembinaan Purcon v Entertainment Village (M) Sdn Bhd:

• when there was a set off or counterclaim based on substantial grounds, there was a bona fide dispute as to the debt.
• since there was a bona fide dispute over the debt, the petitioner was not a creditor within the Act & has no locus to issue notice.

Question 17

STATUTORY NOTICE

Substantially disputed debt - recent application - effect of substantially debt to invocation of winding up proceedings

HC, 2019

Answer 17

Wing Woh Trading Sdn Bhd v Irama Jaya Development Sdn Bhd:

To continue to invoke winding up proceedings when the alleged debt is seriously disputed constitutes an abuse of process of court.

Question 18

STATUTORY NOTICE

Failure to specify limb in intitulement

HC, 2009

Answer 18

Smartframe Sdn Bhd v. Anjung Bahasa Sdn Bhd [2009] 3 CLJ 189 where Hishamudin Mohd Yunus J (as His Lordship then was) said as follows:

• He must not be vague, ambiguous or inconsistent as to his grounds.
• In other words, it does not suffice for him to merely mention ‘s. 218’ of the Companies Act, without specifying the paragraph/limb that he has in mind as being the basis of his petition.
• That would not be fair to the respondent who intends to oppose the petition.
• The respondent (or the court ) cannot be expected to merely speculate, by reading the petition, as to which paragraph/limb of subsection (1) of s. 218 the petitioner is relying.
• It would be unjust to the respondent to expect him to prepare his defence merely by guessing or speculating.
• The petition is grounded is a fundamental defect that warrants a dismissal of the petition.

Question 19

STATUTORY NOTICE

Failure to specify limb in intitulement

HC, 2007

Answer 19

Wong Thai Kuai & Anor v. Kansas Corporation Sdn Bhd:

• failure to state the specific limb of section 218(1) would render the petition being struck off.

Question 20

STATUTORY NOTICE

Failure to specify limb in inititulement - recent

HC, 2012

Answer 20

RHB Bank Bhd v Wembley Industries Holdings Bhd:

• Even if it was a statutory requirement, it is curable under r.194;
• OTF, it is impossible for the respondent to argue that substantial injustice had been caused by the failure to state sub-section 218(1)(e) in the intitulement as they had failed to satisfy the judgment debt and the words of the said sub-section had been reproduced in the body of the petition.
• For this reason as well, it cannot be argued that the failure to state the specific limb of section 218(1) in the intitulement rendered the petition an embarrassing pleading.
• In conclusion, the Petition is not defective for failure to state the specific limb of section 218(1) in the intitulement.

Question 21

STATUTORY NOTICE

Exceeding amount

Answer 21

Wangsini Sdn Bhd v Grand United Holding Bhd:

• Notice claiming interest which is time-barred is held to be a bad notice because it exceeded the amount actually due;
• Subsequently, the petition dismissed.

Question 22

STATUTORY NOTICE

Exceeding amount

CA, 1996

Answer 22

YPJE Consultancy Service Sdn Bhd v. Heller Factoring (M) Sdn Bhd:

• even if the notice overstated the amount owing, it is legitimate to look at the circumstances in order to determine the critical issue upon which the application depends, namely whether or not the company is unable to pay its debts.