IN THIS ARTICLE, the writer EXAMINES THE RECENT DECISION OF THE COURT OF APPEAL IN TAN CHWEE HOCK v. AMBANK (M) BHD ("Tan's Case" ) ON whether a judgment creditor can issue a bankruptcy notice under section 3(1)(i) of the Bankruptcy Act 1967 without obtaining leave of the court, where 6 years or more had lapsed since obtaining a final judgment.
1.1 In Tan's Case , the Bankruptcy proceeding is based on a monetary judgment obtained by the Judgment Creditor against the Judgment Debtor on 7 June 2002 from the High Court of Kuala Lumpur. The Bankruptcy Notice was only filed by the Judgment Creditor on 9 April 2009 and issued by the Bankruptcy Court on the same day. It was filed and issued almost 7 years after the judgment.
1.2 At the High Court when the Judgment Debtor raised the issue that the Bankruptcy Notice was filed without leave being obtained, the High Court rejected the argument and ruled that a Judgment Creditor can issue a Bankruptcy Notice under Section 3(1)(i) of the Bankruptcy Act 1967 ("the Act") without obtaining leave from court under Order 46 rule 2 (1) (a) of the Rules of the High Court 1980 ("RHC") , where 6 years or more had lapsed since obtaining a final judgment. The Judgment Debtor subsequently filed an Appeal against the said decision.
2.1 At the Court of Appeal, the Judgment Debtor among others raised the same issue for determination by the Court of Appeal.
2.2 Mohd Hishamudin Yunus, JCA in delivering the decision of the Court of Appeal considered the provisions of Section 3(1)(i) of the Act and Order 46 rule 2(1)(a) of RHC as follows:-
Section 3(1)(i) of the Act inter-alia provides:-
3. Acts of bankruptcy.
(1) A debtor commits an act of bankruptcy
(i)if a creditor has obtained a final judgment or final order against him for any amount and execution thereon not having been stayed has served on him a bankruptcy notice under this Act requiring him to pay the judgment debt or sum ordered to be paid in accordance with the terms of the judgment or order, and he does not within 7 days after service of the notice comply with the requirements of the notice
Provided that for the purposes of this paragraph any person who is for the time being entitled to enforce a final judgment or final order shall be deemed to be a creditor who has obtained a final judgment or final order;
Order 46 rule 2(1)(a) of RHC provides:-
When leave to issue any writ of execution is necessary
(1)A writ of execution to enforce a judgment or order may not issue without the leave of the Court in the following cases, that is to say:
(a) where 6 years or more have lapsed since the date of the judgment or order.
2.3 Mohd Hishamudin Yunus, JCA in allowing the appeal by the Judgment Debtor held:-
"With respect, based on the above authorities cited, including theobiter dictain the Court of Appeal case of Chin Sin Lan and the Federal Court case of Low Mun , I accept the submission of Mr. Gunaseelan that since in the present case more than 6 years had lapsed since the date of judgment, and that no leave pursuant to Order 46 rule 2(1)(a) of RHC had been obtained to enforce a writ of execution, then theJudgmentCreditor is not a person for the time being entitled to enforce a final judgment for the purpose of the proviso toSection 3(1)(i) of the Act; and that being the case he is not a creditor who has obtained a final judgment for the purpose ofSection 3(1)(i). Accordingly, the Respondent/JudgmentCreditorhas no right to file the Bankruptcy Notice; and, therefore, the bankruptcy notice filed and issued herein must be set aside."
2.4 Further, Mohd Hishamudin Yunus, JCA held that where 6 years or more had lapsed since obtaining the final judgment or final order, a person is no longer entitled to enforce that final judgment or order unless he has obtained prior leave of the Court pursuant to Order 46 rule 2(1)(a) RHC to issue a writ of execution and cited the following cases:-
i. Chin Sin Lan v. Delta Finance Bhd[2004] 3 CLJ 113(Court of Appeal) ;
ii. Re V. Gopal; ex p Bank Buruh (M) Bhd [1987] 1 CLJ 602 (High Court);
iii. Wong Chow Yong t/a Vienna Music Centre v. Public Finance Berhad [1990] 1 CLJ 176 (High Court);
iv. Low Mun v. Chung Khiaw Bank Ltd [1988] 1 MLJ 263 (Federal Court).
2.5 Mohd Hishamudin Yunus, JCA further observed that he was mindful of the dictum of Abdul Hamid Mohamad FCJ (as he then was) in Perwira Affin Bank Bhd v. Lim Ah Hee[2004] 2 CLJ 787 (Federal Court) that no leave of court is necessary to issue a bankruptcy notice after 6 years as required by Order 46 rule 2 of RHC.
2.6 As to the dictum of Abdul Hamid Mohamad FCJ, Mohd Hishamudin Yunus, JCA made the following observations:-
i. the decision in Perwira Affin Bank Bhd v. Lim Ah Hee is mere obiter dicta[ii] as the issues before the Federal Court did not concern Order 46 rule 2(1)(a) of RHC; and
ii. the said decision was also per incurium[iii] for two reasons:-
(a) firstly, Abdul Hamid Mohamad FCJ in his judgment failed to take into account the proviso to Section 3(1)(i) of the Act; and
(b) secondly, contrary to what was said by the learned Federal Court judge, the Malaysian law reports show that the majority of the reported Malaysian cases hold the view that for the purpose of bankruptcy proceedings, leave is required under Order 46 rule 2(1)(a) of RHC where there has been a lapse of 6 years or more.
3.1 The Court of Appeal's decision in Tan's Case establish that in the case where more than 6 years had lapsed since the date of judgment and that no leave pursuant to Order 46 rule 2(1)(a) of RHC has been obtained to enforce a writ of execution, then the Judgment Creditor is not a person for the time being entitled to enforce a final judgment for the purpose of the proviso to Section 3 (1)(i) of the Act ; and that being the case he is not a creditor who has obtained a final judgment for the purpose of Section 3(1)(i) of the Act.
3.2 Clearly, on the authority of Tan's Case, a Judgment Creditor with a judgment of more than 6 years has no right to file the bankruptcy notice without prior leave from court. Any Bankruptcy Notice filed and issued there under is likely to be set aside.
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