Chapter 6 - Creditor's Petition Flashcards
CREDITOR’S PETITION
Overview
1) Pre-conditions for petition
2) Authority to present petition
3) Limitation period for issuance of petition
4) Procedural requirements for issuance of petition
5) Service of petition
6) Second bankruptcy petition
7) Hearing in petition
8) Adjournment
9) Re-instatement & filing afresh
PRE-CONDITIONS FOR PETITION
Overview
1) The law
2) Debt above RM50k
3) Domiciled in Malaysia
4) Petition by secured creditor
5) Petition against other guarantor
6) Failure to comply
PRE-CONDITIONS FOR PETITION
The law
S.5 IA, inter alia:
- debt over 50k, liquidated sum;
- act of bankruptcy occur within 6 months before presentation of petition;
- debtor is domiciled/ordinarily resided/had a dwelling house/had a place of business/has carried on business in Malaysia within one year before the presentation of petition.
PRE-CONDITIONS FOR PETITION
S.5(1)(a) - Debt over RM50k
S.5(1)(a) IA:
- debt owing amounts to average of RM50k.
- COVID minimum amount temporary until 31/8/21: RM100k.
PRE-CONDITIONS FOR PETITION
Debt over 50k - effect of less statutory amount
Re Mat Shah, ex p Raghbir Shah:
- debt showing less than statutory amount can be a ground to oppose or show cause against the petition.
PRE-CONDITIONS FOR PETITION
Debt over 50k - hire-purchase agreement
Re Naspu bin Daud; ex p Affin Bank Bhd:
- the vehicle is valued below the statutory minimum;
- HC set aside the RO & AO.
PRE-CONDITIONS FOR PETITION
Debt over 50k - substantial reduction amount during hearing
CA, 2009
Soo Kok Loong v Hong Kong & Shanghai Banking Corporation:
- substantial reduction in judgment debt during hearing will be allowed;
- this is so unless it is below the statutory minimum;
- OTF, it is held that the error was fatal as the sum owing was far below the statutory amount.
PRE-CONDITIONS FOR PETITION
S.5(1)(d) - domiciled/resided/etc within one year
S.5(1)(d) IA
- debtor is domiciled/ordinarily resided/had a dwelling house/had a place of business/has carried on business in Malaysia within one year before the presentation of petition.
PRE-CONDITIONS FOR PETITION
Domiciled in Malaysia - Ordinarily Resided - Whether disjunctive or conjunctive - past & present tense
Re Alfred Lam Choong Choy:
- The key word used in para (1)(d) of s. 5 of the Act is the disjunctive “or” between the words “ordinarily resided “ and or “had a dwelling house “ in Malaysia and both are expressed in the past tense.
- This means that the JC only has to prove that the JDs either ordinarily resided in or owned a dwelling house in Malaysia within one year before the presentation of the CP.
PRE-CONDITIONS FOR PETITION
Bankruptcy petition by secured creditor - the law
S.5(2) IA:
- A secured creditor must state in his petition either he is willing to give up his security for the benefit of the creditors OR give an estimate value of his security.
PRE-CONDITIONS FOR PETITION
Bankruptcy petition by secured creditor - failure to comply with S.5(2)
M Hashimi v Asia Commercial Finance (M) Bhd:
- Failure to state & comply with S.5(2) was held to be fatal to the petition.
- For S.5(2) to apply, the creditor presenting the petition must be a secured creditor within S.2.
- Followed by HC in: PER: LEONG LAM KAI @ LEONG LAM KWI; EX-PARTE: RHB BANK BERHAD (HC, 2008)
PRE-CONDITIONS FOR PETITION
Bankruptcy petition against other guarantor - the law
S.5(3):
- no petition against social guarantor;
- petition against other guarantor must get leave.
S.5(4) + (6):
- court must satisfy itself that petitioning creditor has exhausted all other modes of execution before granting leave.
- i.e. seizure & sale, JD summons, garnishment & bankruptcy winding up.
S.5(5):
- creditor shall state the particulars of the borrower in his petition.
PRE-CONDITIONS FOR PETITION
Bankruptcy petition against other guarantor - time to file for the leave in S.5(3)(b)
CA, 2018
Hong Leong Bank Bhd v Ong Moon Huat:
- upon the issuance of the BN; or
- prior to issuance to BN, up to immediately upon filing of the petition.
PRE-CONDITIONS FOR PETITION
Bankruptcy petition against other guarantor - meaning of “debtor” in S.5(4)
CA, 2018
Hong Leong Bank Bhd v Ong Moon Huat:
- the word debtor must mean the principal debtor or borrower;
- NOT the guarantor.
PRE-CONDITIONS FOR PETITION
Bankruptcy petition against other guarantor - test to grant leave
Ravichatiran a/l Ganesan v Mat Shah bin Safuan:
- court must satisfy itself that petitioning creditor has exhausted all other modes of execution before granting leave.
- i.e. seizure & sale, JD summons, garnishment & bankruptcy winding up.
PRE-CONDITIONS FOR PETITION
Failure to comply - the law
S.5(7):
- if the petitioning creditor fails to comply, the court shall dismiss the petition.
PRE-CONDITIONS FOR PETITION
Failure to comply - the law & case
Stephen Wong Leong Kiong v HSBC Malaysia Bank Bhd:
- bankruptcy proceedings are of a quasi-penal in nature so all procedural requirements must be complied;
- when there is non-compliance, petition ought to be dismissed & S.6(3) ought to be given effect.
AUTHORITY TO PRESENT PETITION
Overview
1) Corporations
AUTHORITY TO PRESENT PETITION
Corporations - the law
1) S.133 IA
- corporation may act by any of its officers authorised on its behalf under the seal of the corporation.
2) r.215 IR
- officer may act in his own name stating that he is such officer under seal;
- petition may be presented by the corporation & signed by the officer on its behalf.
AUTHORITY TO PRESENT PETITION
Corporations - application of the law - meaning of officer
Re Daljit Kaur Harjan Singh; ex parte Perbadanan Pengurusan Ixora (CA, 2015):
- Any person chosen by corporation to act for it as its agent is an officer within S.133;
- If the person is duly authorised, he can act for the corporation.
AUTHORITY TO PRESENT PETITION
Corporations - application of the law - failure to act under the seal - petition valid
Ho Fok v Ann Bee (M) Sdn Bhd:
- The officer signing the petition need not act under the seal of corporation if he is working for the company;
- the requirement under r.215 is only applicable if he is its agent.
- thus, petition is valid regardless.
AUTHORITY TO PRESENT PETITION
Corporations - application of the law - failure to act under the seal - petition invalid
UMW Industries Sdn Bhd v Lim Chee Hian:
- under r.215 & S.133, officer acting for the company must be authorised by the seal of the company.
- failure to act under the seal contravenes the rules & the Act;
- hence, the petition is invalid & not curable under S.131.
LIMITATION PERIOD FOR ISSUANCE OF PETITION
Limitation Act
S.6(3) LA:
- Action upon the judgment cannot be brought after 12 years;
- Arrears of interest is claimable up to 6 years only.
LIMITATION PERIOD FOR ISSUANCE OF PETITION
Insolvency Act
S.5(1)(c):
- Before a petition can be presented, act of bankruptcy must have occurred within 6 months before the presentation of the petition.
PROCEDURAL REQUIREMENTS FOR ISSUANCE OF PETITION
Overview
1) Attestation
2) Affidavit
PROCEDURAL REQUIREMENTS FOR ISSUANCE OF PETITION
Attestation - the law
r.101:
- attested in MY: witness can be solicitor, FC, Mag, DGI or Reg.
- attested outside MY: witness must be Judge, Mag, Consul, Vice-Consul or Notary Public.
PROCEDURAL REQUIREMENTS FOR ISSUANCE OF PETITION
Attestation - foreign solicitors
Ooi Thean Chuan v Banque Nationale de Paris:
- petition was attested by Singapore solicitor;
- it was held that the attesting witness was not a qualified person.
PROCEDURAL REQUIREMENTS FOR ISSUANCE OF PETITION
Attestation - semenanjung solicitors
Lie Kok Keong v Tang Container & Services Sdn Bhd:
- solicitors in peninsular MY is not authorised to attest a petition in S&S and vice versa.
PROCEDURAL REQUIREMENTS FOR ISSUANCE OF PETITION
Affidavit - the law
1) S.6(1)
- CP shall be verified by an affidavit of the creditor or of some person on his behalf;
- Deponent must have knowledge of the facts.
2) r.105:
- CP shall be verified by an affidavit.
PROCEDURAL REQUIREMENTS FOR ISSUANCE OF PETITION
Affidavit - issue - date of affidavit is before the date of petition - petition invalid
Sobri Arshad v Associated Tractors Sdn Bhd:
- Affidavit was affirmed a day before petition is presented;
- It was held that the petition is nullified & cannot be cured by S.131.
PROCEDURAL REQUIREMENTS FOR ISSUANCE OF PETITION
Affidavit - issue - date of affidavit is before the date of petition - petition valid
Koh Kim Kuang v MBF Finance Bhd:
- since S.6(1) & r.105 do not prescribe the time for the affidavit to be affirmed, affidavit affirmed before the date of petition is valid.
PROCEDURAL REQUIREMENTS FOR ISSUANCE OF PETITION
Affidavit - issue - date of affidavit is on the date of petition - petition valid
Re Ho Weng Keong ex p Marketlink:
- since S.6(1) & r.105 do not prescribe the time for the affidavit to be affirmed, affidavit affirmed on the date of petition is valid.
SERVICE OF PETITION
Overview
1) Personal service
2) Substituted service
3) Effect of irregular service
SERVICE OF PETITION
Personal service - overview
1) The law
2) Service on solicitor
3) Recent application
SERVICE OF PETITION
Personal service - the law
S.6(1):
- CP shall be served personally to the debtor.
r. 108: - CP shall be personally served;
- service shall be effected by the officer of court or by the creditor or his solicitor or dispatcher;
- it is done by delivering a sealed copy of the petition to the debtor.
SERVICE OF PETITION
Personal service - service to solicitor
Dato’ Hj Yusuf Kamari v CIMB Bank Bhd:
- Service on solicitor which validly represented the debtor is a valid service.
Lim Boon Kiak v Affin Bank Bhd:
- CP cannot be served on a firm of solicitors, unless there is a clear indication (in writing) that the said firm of solicitors has the authority to accept service of the documents on behalf of the judgment debtor.
SERVICE OF PETITION
Personal service - recent application
CA, 2013
Lim Boon Kiak v Affin Bank Bhd:
- r.109 makes it mandatory for the creditor’s petition to be served personally on the JD;
- The sealed copy of the petition must be delivered personally to the debtor.
- In the event that prompt personal service cannot be effected, after attempts have been made, the only avenue left is to apply for substituted service as provided for under r. 110.
- Substituted service can only be effected with leave of the court.
- With the clear provisions of the above rules, creditor’s petition against a judgment debtor cannot be served by any other means.
SERVICE OF PETITION
Substituted service - overview
1) The law
2) Pre-requisite
3) Effecting SS order
4) Recent application
SERVICE OF PETITION
Substituted service - the law
r.109
SERVICE OF PETITION
Substituted service - pre-requisite - the cases
1) Leow Boke Chooi v Asia Motor Co.:
- 2 calls must be made prior.
2) Re S Nirmala:
- SS can only be granted if JD is evading service;
- PD has no application if D’s whereabouts is not known.
SERVICE OF PETITION
Substituted service - application - effecting SS order
HC, 2017
Kamalasan a/l Tangarajoo v Ambank (M) Bhd (HC, 2017):
JC has correctly followed the order for SS by:
- newspaper advertisement;
- notice put up at Shah Alam High Court;
- service to JD’s last known address.
SERVICE OF PETITION
Substituted service - recent application
CA, 2014
Goh Kein Hooi v OCBC Bank Bhd:
- In light of the clear evidence that the JD was attempting to evade service and the proper procedure for service was complied with, the order for substituted service was properly obtained.
SECOND BANKRUPTCY PETITION
Overview
1) The law
2) The case
SECOND BANKRUPTCY PETITION
Overview
1) The law
2) The case application
SECOND BANKRUPTCY PETITION
The law
S.49 IA:
- provisions as to second bankruptcy
SECOND BANKRUPTCY PETITION
The case application
Sama Credit & Leasing Sdn Bhd v Pegawai Pemegang Harta Malaysia:
- S.8(1) did not prohibit the making of second or subsequent RO & AO.
- By virtue of S.49(1) & (2), the making of second & subsequent RO & AO against undischarged bankrupt is permissible.
HEARING IN PETITION
Overview
1) Procedures at hearing
2) Effect of sufficient proof
3) Effect of insufficient proof
HEARING IN PETITION
Procedures at hearing - the law
S.6(2): at the hearing, court shall require the proof of
- debt of petitioning creditor;
- act of bankruptcy
- the service of petition in case if the debtor is absent.
HEARING IN PETITION
Procedures at hearing - proof through cross-examination, whether necessary
Affin Bank Bhd v Tan Sri Kishu Tirathai:
- It is not mandatory for the petitioning creditor to prove the debt again through the cross-examination;
- This is so when the affidavit verifying the petition was never challenged.
HEARING IN PETITION
Procedures at hearing - personal presence, whether necessary
1) r.120:
- personal attendance of the creditor may be dispensed with.
2) Affin Bank Bhd v Tan Sri Kishu Tirathai:
- Personal attendance of the petitioning creditor is not required;
- The attendance of counsel is necessary.
HEARING IN PETITION
Effect of sufficient proof
S.6(2) proviso:
- court may make a BO in pursuance of the petition if it satisfied with the proof.
HEARING IN PETITION
Effect of insufficient proof
S.6(3): Court may dismiss the petition if:
- it is not satisfied with the proof of the petitioning creditor’s debt;
- it is not satisfied with the proof of the act of the bankruptcy;
- it is not satisfied with the proof of the service of the petition;
- it is satisfied by the debtor that he is able to pay his debts;
- for other sufficient cause no order ought to be made.
HEARING IN PETITION
Dismissal of petition - ability to pay debt, when assessed
Affin Bank Bhd v Abu Bakar Ismail (FC, 2020):
- Ability to pay debt is assessed at the day of hearing the CP.
ABSENCE OF PARTIES
Overview
1) Absence of debtor
2) Absence of creditor
3) Personal attendance, whether required
ABSENCE OF DEBTOR
the law
r. 118:
- court may dismiss the petition.
ABSENCE OF CREDITOR
the law
r. 119
- no subsequent petition may be presented against the same debtor(s) without the leave of the court.
PERSONAL ATTENDANCE, WHETHER REQUIRED
the law & the case
1) r.120:
- personal attendance of the creditor may be dispensed with.
2) Affin Bank Bhd v Tan Sri Kishu Tirathai:
- Personal attendance of the petitioning creditor is not required;
- The attendance of counsel is necessary.
ADJOURNMENT
Overview
1) The law on adjournment
2) Test to grant adjournment
3) Adjournment after expiration of 11 months
ADJOURNMENT
The law on adjournment
1) S.93(2):
- Court may adjourn any proceedings upon any terms it thinks fit.
2) r.126:
- No adjournment after the expiration of one month from the day of first hearing;
- No further adjournment by consent of parties unless debtor has given prior notice that he intends to show cause.
ADJOURNMENT
Adherence to r.126
OCBC Bank (M) Bhd v Sethu a/l Ambalagara Thevar:
- r.126 should be strictly adhered to & an adjournment not exceeding one month should be allowed only once.
ADJOURNMENT
Discretion & test to grant adjournment
Re Dato’ Mohamed Pilus bin Yusoh, ex p Southern Bank Bhd:
- court has discretion to grant adjournment for the hearing if there is sufficient cause or any reasonable gound
- Test: sufficient cause as to why adjournment ought to be granted.
ADJOURNMENT
After expiration of 1 month
Re Tan Eng Niang, ex p Ng Choo Kwan & Sons Hardware Sdn Bhd:
- No adjournment after the expiration of one month from the day of first hearing;
- No further adjournment by consent of parties unless debtor has given prior notice that he intends to show cause.
RE-INSTATEMENT OR FILING AFRESH
Filing afresh allowed
CA, 2000
BBMB Factoring Bank Bhd v Mariam Sasiman:
- The jurisdiction under s. 92(1) Bankruptcy Act 1967 applies to any order made by a bankruptcy court.
- It must therefore ex necessitae rei apply to an order dismissing or striking out a creditor’s petition.
- A creditor whose petition has been dismissed or struck out on the grounds of his absence has two courses open to him.
- He may apply to have the petition reinstated pursuant to s. 92(1) or he may present a fresh petition against the debtor.
- If he wishes to present a fresh petition, he must, if proposes to rely upon the same act of bankruptcy, obtain leave of court before presenting a new petition.
