Chapter 7 - Challenging Creditor's Petition Flashcards
CHALLENGING CREDITOR’S PETITION
Overview
1) General ways to challenge CP
2) Difference between the two
3) Hearing CP challenge
3) Challenging CP by showing cause
4) Challenging CP by setting-aside or striking out
5) Grounds to challenge CP
CHALLENGING CREDITOR’S PETITION
General ways to challenge CP
Dato’ Seri Teong Teck Leng v Jupiter Securities Sdn Bhd:
CP may be challenged in two ways:
1) Show cause - r.116:
- file a notice in Form 45;
- the notice needs to specify the statements in the petition which he intends to deny or dispute.
2) Set-aside petition - r.17:
- For example such as for non-compliance with the rules regarding the petition.
CHALLENGING CREDITOR’S PETITION
Difference between both ways to challenge CP
Dato’ Seri Teong Teck Leng v Jupiter Securities Sdn Bhd:
1) Show cause:
- with regards to the substantive content of the petition;
2) Set-aside:
- with regards to procedural requirements of the issuance of the petition.
“showing cause is like filing a statement of defence, and setting-aside is like striking-out under O.18, r.19”
CHALLENGING CREDITOR’S PETITION
Hearing CP challenge
Dato’ Seri Teong Teck Leng v Jupiter Securities Sdn Bhd:
- there should be no separate hearing to challenge CP:
- challenge on CP should be considered at the hearing of CP.
- i.e. statement of defence is not heard separately from hearing the claim.
CHALLENGING CP BY SHOWING CAUSE
Overview
1) the law
2) the procedure
CHALLENGING CP BY SHOWING CAUSE
The law
r. 116:
- lays down procedure where debtor intends to show cause.
CHALLENGING CP BY SHOWING CAUSE
The procedure
Dato’ Seri Teong Teck Leng v Jupiter Securities Sdn Bhd:
- File a notice in Form 45;
- Notice must specify the statements in the petition which he intends to deny or dispute;
- Serve the notice to the petitioning creditor 3 days before day of hearing the petition.
CHALLENGING CP BY SETTING-ASIDE OR STRIKING-OUT
Overview
1) The law
2) The procedure
CHALLENGING CP BY SETTING-ASIDE OR STRIKING-OUT
The law
r. 17:
- any application must be made by summons in chambers.
CHALLENGING CP BY SETTING-ASIDE OR STRIKING-OUT
The procedure
Datuk Seri Teong Teck Leng v Jupiter Securities:
- where the JD wants to apply to set-aside the CP, a summons-in-chambers has to be filed.
GROUNDS TO CHALLEGE CP
Overview
1) Incurable grounds
2) Curable grounds
INCURABLE GROUNDS TO CHALLENGE CP
Overview
1) Illegality
2) Invalid authority to present petition
3) Improper attestation
4) Abuse of process
5) Irregular service of CP
6) Disputes as to amount of debt
INCURABLE GROUNDS TO CHALLENGE CP
Illegality
Re Haji Yahya Lampong:
- The loan was illegal because the creditor has no license to operate the bank.
INCURABLE GROUNDS TO CHALLENGE CP
Invalid authority to present petition - law on authority to present petition
S.133 IA:
- Authority for corporations / mentally disordered person.
r. 215: - procedures on how officer of corporation should act.
INCURABLE GROUNDS TO CHALLENGE CP
Invalid authority to present petition - example
2) UMW Industries Sdn Bhd v Lim Chee Hian:
-
INCURABLE GROUNDS TO CHALLENGE CP
Improper attestation - law on proper attestation
INCURABLE GROUNDS TO CHALLENGE CP
Improper attestation - example of improper attestation - attestation by foreign solicitor
Ooi Thean Chuan v Banque Nationale de Paris:
- Petition was attested by solicitor from SG;
- It was held that the witness is not qualified person;
- Petition invalid.
INCURABLE GROUNDS TO CHALLENGE CP
Improper attestation - example of improper attestation - attestation by solicitor in Semenanjung
Lie Kok Keong v Tang Container & Services Sdn Bhd:
- A solicitor in S&S cannot attest to petition in Semenanjung & vice versa.
INCURABLE GROUNDS TO CHALLENGE CP
Abuse of process
Chin Wee Ming v Wong Pak Hock:
- in order to prove that the proceeding was an abuse of court process, JD would have to adduce strong evidence to show that there was mala fide on the part of JC.
INCURABLE GROUNDS TO CHALLENGE CP
Irregular service
Affin Bank Bhd v Abu Bakar Ismail:
- Petition was dismissed on a few grounds; one of the grounds is irregular service of the petition.
INCURABLE GROUNDS TO CHALLENGE CP
Disputes as to amount of debt
Parkson Corporation Sdn Bhd v Millenium Mall Sdn Bhd:
- when a debt presented by creditor is GENUINELY DISPUTED by the debtor, it can be a ground to dismiss the petition.
- i.e. “if a creditor were to present a debt which is genuinely disputed upon substantial grounds, it would be proper for a Court to decline to wind up the company.”
INCURABLE GROUNDS TO CHALLENGE CP
All & other grounds
- No debt is owing: s6(3) IA
- Debt is less than statutory amount (s.5(a) IA 1967 RM50,000.00)
- Debt is not a liquidated sum: s5(b) IA 1967
- Time barred-more than 6 years: s6(3) limitation period
- Debtor is able to settle the debt: s.6(3) IA
- Petition was filed 6 months after the act of bankruptcy: s.5(c)IA 1967
- Debtor is not within the jurisdiction, not domiciled /residing or carrying business in Malaysia: s3(3) IA 1967
- Petition is irregular: i.e. Not signed/attested: r.98 IR 2017, Officer/ company is not authorized to affirm the petition, Defects in attestation: r101 IR 2017, Bad service
CURABLE GROUNDS TO CHALLENGE CP
Overview
1) Excessive demand
2) Wrong date of act of bankruptcy
CURABLE GROUNDS TO CHALLENGE CP
Excessive demand
Chin Sin Lan v Delta Finance:
- when the debtor fails to give notice to dispute the amount claimed, the petition will be valid even though the demand specified was excessive.
- i.e. failure to give notice at the BN stage amounts to waiver.
