Aseambankers Malaysia Berhad v Gula Perak Berhad (WA-28PW-516-10/2022)

1.

2.

AMBANK (M) BERHAD [dahulunya dikenali sebagai AmFinance Berhad, yang menerima segala aset, hak dan liabiliti serta perniagaan AmBank Berhad menurut

Mahkamah bertarikh 18/5/2005]

DBS BANK LTD, LABUAN BRANCH [dahulunya dikenali sebagai The Development Bank of Singapore Limited (Labuan Branch)]

5.

MALAYAN BANKING BERHAD [yang menerima pindahmilik keseluruhan aset dan liabiliti Mayban Finance Berhad yang telah diletakhak menurut Perintah Mahkamah bertarikh 17/8/2004]

MALAYSIAN INDUSTRIAL DEVELOPMENT

8.

AFFIN BANK BERHAD … PLAINTIF-PLAINTIF

1.

LIM SUE BENG … DEFENDAN-DEFENDAN Page 2 of 17 JUDGMENT (Enclosure 20) [1] This was an appeal by the 3rd, 5th, 6th and 7th Plaintiffs (collectively referred to as “the Judgment Creditors” or “JCs”) against the decision of the Deputy Registrar dated 28.2.2023 dismissing the JCs’ application for leave to issue execution against the 2nd Defendant (“Judgment Debtor” or “JD”) under Order 46 Rule 3 of the Rules of Court 2012 (“ROC”) (Enclosure 2). A] SALIENT BACKGROUND FACTS [2] The salient facts leading to this appeal are as stated below. [3] In 2005, the Plaintiffs commenced an action against Gula Perak Berhad (1st Defendant) for failure to repay financing facilities, with the JD standing as guarantor. [4] On 29.10.2010, judgment was obtained in favour of all Plaintiffs (collectively) against both Defendants (“the Judgment”) for the total principal sum of RM20,794,870.48. [5] On 24.2.2011, all Plaintiffs including the JCs commenced bankruptcy proceedings against the JD vide Bankruptcy Notice No. D-29-750-2011 (“First BN”). [6] The First BN was filed in February 2011, shortly after obtaining the Judgment. However, complications arose when the 2nd Plaintiff settled with the JD and sought to withdraw from the proceedings. This led to protracted litigation up to the Federal Court, which ultimately resulted in the withdrawal of the First BN on 25.7.2019 with liberty to file afresh. [7] The First BN was withdrawn on 25.7.2019 following the Federal Court’s decision on 15.5.2019. [8] The chronology of the First BN (2011-2019) is summarised below: i)

24.2.2011: First BN issued. Page 3 of 17 ii)

15.12.2015: The 2nd Plaintiff’s debt was fully settled. iii) 16.12.2015: The Plaintiffs collectively filed an application (vide Summons In Chambers) to seek for an order, inter alia, that the 2nd Plaintiff cease to be a party to the bankruptcy proceedings (Enclosure 46). iv) 28.3.2016: Enclosure 46 was not allowed. The JD then appealed to the Court of Appeal. v)

1.3.2017: The Court of Appeal allowed the appeal and reversed the High Court’s order of 28.3.2016. Thereafter the Plaintiffs filed an application for leave to appeal to the Federal Court. vi) 12.3.2018: The Federal Court allowed the Plaintiffs’ leave application. vii) 15.5.2019: The Federal Court dismissed the Plaintiffs’ appeal and affirmed the Court of Appeal’s decision. The Plaintiffs were ordered to withdraw the bankruptcy proceedings (in respect of the First BN) in its entirety. viii) 25.7.2019: First BN withdrawn. [9] On 1.12.2020, approximately 16 months after withdrawal of the First BN, the JCs (together with the 8th Plaintiff then) filed the application for leave to execute the Judgment (“First Leave Application”). [10] On 8.12.2020, they obtained an ex-parte order for leave to execute the Judgment (“First Leave Order”). The JD then attempted to set aside First Leave Order but was not successful. [11] On 15.1.2021 the JCs commenced fresh bankruptcy proceedings against the JD vide Bankruptcy Notice No. WA-29NCC-40-01/2021 (“Second BN”). However, the JCs faced various challenges, the chronology of which are as follows: i)

15.1.2021: Second BN filed. Page 4 of 17 ii)

11.3.2021: The JD applied to aside the Second BN pursuant to Rule 93 of the Insolvency Rules 2017 by way of affidavit (Enclosure 4). iii) 15.7.2021: The JD file a Summons In Chambers to set aside the 2021 BN (Enclosure 10). iv) 23.7.2022: The 3rd, 5th, 6th, 7th and 8th Plaintiffs filed an application vide Summons In Chambers for leave to commence the bankruptcy action pursuant to Section 5(3)(b) of the Insolvency Act 1967 (Enclosure 12). v)

24.3.2022: The Senior Assistant Registrar dismissed Enclosure 4 and 10 and allowed Enclosure 12. vi) 7.4.2022: The JD filed appeals to the Judge-In-Chambers against the Senior Assistant Registrar’s decision in respect of Enclosures 4 and 10 and 12. The Appeals were registered as Enclosures 44, 45 and 46 respectively. vii) 23.9.2022: The High Court Judge allowed Enclosure 46 (regarding Enclosure 12), the JD’s appeal against the grant of leave to commence the bankruptcy action based on the Second BN as the 3rd, 5th, 6th, 7th and 8th Plaintiffs needed to first obtain leave to commence bankruptcy proceedings against the JD as a guarantor, but had failed to do so. This rendered the Second BN defective. As a result of this finding, the High Court Judge held that the JD’s other appeals in Enclosure 44 (appeal against dismissal of application to set aside BN by affidavit (Enclosure 4) and Enclosure 45 (appeal against dismissal of application to set aside BN by Summons in Chambers (Enclosure 10) and Enclosure 66 (appeal against dismissal of stay application) were academic. viii) 29.9.2022: The Senior Assistant Registrar struck out the Second BN proceedings entirely since they were commenced without the requisite leave under Section 5(3)(b) against the JD as guarantor and this rendered the Second BN defective. [12] On 20.10.2022, the 3rd, 5th, 6th, 7th and 8th Plaintiffs filed appeals to the Court of Appeal against the High Court's decision of 23.9.2022. Page 5 of 17 [13] On 21.10.2022, the JCs filed the present application in Enclosure 2 seeking fresh leave to execute the Judgment, just prior to the expiry of 12 years from the date of Judgment (“Second Leave Application”). [14] On 28.2.2023, the Deputy Registrar dismissed Second Leave Application (Enclosure 2), leading to this appeal. B] THE DEPUTY REGISTRAR’S DECISION [15] The Deputy Registrar’s grounds for dismissing Second Leave Application are as follows: i) Although the application was made within time, the fact that it was made within the 12-year period under Section 6(3) Limitation Act 1953 was not itself sufficient reason for granting leave, based on Affin Bank v. Wan Abdul Rahman [2003] 2 MLJ 609. ii) Allowing the application would be prejudicial to the JD as it would extend the time limit for enforcing rights under Section 6(3) Limitation Act 1953. iii) In allowing this application, the Court is extending the time limit for enforcing or claiming a right under Section 6(3) of the Limitation Act 1953. The Limitation Act sets different time periods for various claims to be enforced in court. A statute of limitation does not confer a right of action; rather, it limits the period within which a right can be asserted (Kerajaan Malaysia v. Gold Bridge Engineering & Construction Sdn Bhd [2022] MLJU 3075). C] ISSUES FOR DETERMINATION [16] The main issues before this Court are: i) Whether the JCs have satisfied the requirement of Order 46 Rule 3 ROC and its related provisions; Page 6 of 17 ii) Whether execution of the Judgment is barred by limitation under Section 6(3) Limitation Act 1953; iii) Whether fresh leave can be granted more than once or multiple times; iv) Whether the application was properly made ex-parte. D] THE JUDGMENT CREDITORS’ ARGUMENTS [17] The JCs contend that: i) The Deputy Registrar erred in holding that Section 6(3) Limitation Act 1953 applies to execution proceedings. The Federal Court in Perwira Affin Bank Bhd v. Lim Ah Hee [2004] 3 MLJ 253 and Dr Shamsul Bahar bin Abdul Kadir v. RHB Bank Bhd [2015] 4 MLJ 1 held that Section 6(3) does not apply to execution proceedings. ii) Order 46 Rule 2(3) ROC empowers the Court to grant fresh leave even if prior leave was given, following Moez Ali bin Akbarally v. Public Bank Bhd [2021] 5 MLJ 169. iii) The application was made ex abundant cautela to preserve the JCs rights pending appeals. iv) The JCs are entitled to apply ex-parte under Order 46 Rule 3(1) ROC as confirmed in Malayan Banking Bhd v. Foo See Moi [1981] 2 MLJ 17. E] THE JUDGMENT DEBTOR’S ARGUMENTS [18] The JD contends that: i) The application amounts to abuse of process as the First Leave Order remains operative pending appeals. ii) The Judgment has lapsed after 12 years under Section 6(3) Limitation Act 1953. Page 7 of 17 iii) The application was made in bad faith by attempting to exclude the JD through ex-parte proceedings despite prior court observations that notice should be given. iv) The JCs have not provided cogent reasons for the 16-month delay after withdrawal of the First BN before obtaining the First Leave Order. F] ANALYSIS AND DECISION [19] Having considered the submissions and the cause papers in this appeal before me, I find no reason to disturb the Deputy Registrar’s decision dismissing the Second Leave Application, albeit my reasoning differs somewhat. [20] At the outset, I note three important preliminary points: i) Although the Second Leave Application was made ex parte as permitted under Order 46 Rule 3(1) ROC, it was converted to inter partes by the Deputy Registrar. Hence, the JD had every opportunity to oppose the Application and therefore, there is no prejudice to the JD on this ground. ii) The Court has jurisdiction to grant leave to execute a judgment more than once under Order 46 Rule 2(3) ROC which states as follows: “Where the Court grants leave, whether under this rule or otherwise, for the issue of a writ of execution and the writ is not issued within one year after the date of the order granting such leave, the order shall cease to have effect, without prejudice, however, to the making of a fresh order.” (own emphasis added) (see Moez Ali bin Akbarally v. Public Bank Bhd [2021] MLJU 1028 (COA) where the application for leave to execute was made twice) Page 8 of 17 iii) An application for leave to issue execution of judgment under Order 46 Rule 3 ROC is not an “action upon judgment” under Section 6(3) Limitation Act 1953 (Perwira Affin (supra); Dr Shamsul Bahar (supra)). The Federal Court in Perwira Affin (supra) held that “action” under Section 6(3) Limitation Act 1953 refers to “fresh actions” such as bankruptcy proceedings and does not include proceedings by way of execution. [21] With regards to the third preliminary point, Section 6(3) Limitation Act 1953 states: “(3) An action upon any judgment shall not be brought after the ' expiration of twelve years from the date on which the judgment became enforceable and no arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years from the date on which the interest became due.” (own emphasis added) [22] In Perwira Affin (supra), the Federal Court held that bankruptcy proceeding does not fall within the meaning of “action” in Section 6(3) Limitation Act 1953. The following passages from the Federal Court make this clear: “[49] We have seen from the decided cases and I agree that a bankruptcy proceeding is not ‘a writ of execution’ within the meaning of O 46 r 2 RHC. But, that does not necessarily mean that it is therefore ‘an action’ within the meaning of s 6(3). We still have to consider the meaning of ‘an action upon any judgment’ in the light of the definition given in s 2 of the Limitation Act 1953 that includes ‘a suit or any other proceeding’.” ……. “[53] On these grounds, I am inclined to the view that a bankruptcy proceeding, by definition of the word ‘action’ in s 2 of the Act is an ‘action’ and it is caught by the provisions of s 6(3).” (own emphasis added) [23] The same position was taken by the Federal Court in Dr Shamsul Bahar (supra) where it was held, inter alia, as follows: Page 9 of 17 i) A bankruptcy proceeding was not execution but it was an action upon a judgment. ii) As bankruptcy proceeding was an action upon a judgment, then it could not be brought after the expiration of 12 years from the date that the judgment becomes enforceable (Section 6(3) Limitation Act 1953). [24] Therefore, I differ with the findings of the learned Deputy Registrar, and instead, I find that: i) A bankruptcy proceeding is an “action upon” a “judgment” and as such falls within Section 6(3) Limitation Act 1953. ii) However, a bankruptcy proceeding is not an execution or enforcement proceeding within the meaning of Order 46 Rule 2 and 3 ROC read together with Order 45 ROC. iii) The Second Leave Application does not extend the limitation period under Section 6(3) of the Limitation Act 1953. However, the issue is that if 12 years have passed since the date of the Judgment, the Application would serve no purpose. [25] Whilst I may differ from the learned Deputy Registrar on the above issues, however, this does not vitiate his ultimate decision in dismissing the Second Leave Application. [26] The main and critical issue here turns on whether the JCs have demonstrated sufficient grounds for the grant of leave. [27] An application under Order 46 ROC requires the judgment creditor to provide cogent reasons explaining why execution could not be effected within the first 6 years after judgment, including any impediments faced by him. This requirement is clearly established in Moez Ali (supra) where the Court of Appeal held as follows: [31] We found merit in the respondent’s submission that the respondent only need to show the court sufficient reasons in support of the application to explain the delay in proceedings with the execution and/or bankruptcy proceedings against the appellants. Here we must emphasise that so long as the applicant for leave provide some plausible reasons in support for leave to execute after a lapse of six years then leave ought to be given, after all a judgment could not be defeated unless it is time barred. We must also state Page 10 of 17 that laches must not apply in the process of execution of a judgment. What we have stated here is plain from a reading of O 46 r 2(3) of the ROC 2012 which provides that the court has the power to give fresh leave if no execution is taken after a lapse of a year after the leave is given. Here we can see that the court’s task is to ensure that there must be some reason for the delay. (own emphasis added) [28] This brings me to the next question: what was the JCs’ reason for the delay in executing the Judgment until almost 12 years? [29] In Tio Chee Hing v. Chung Khiaw Bank [1981] 1 MLJ 227, the Federal Court found the following explanation given by the respondent (judgment creditor) for the delay acceptable: “The reasons for the delay were given by one Mr. Wong Theen Foot, the manager of the respondent Bank's Brandi at Sandakan, in Ins affidavit in support of the application for leave. It was explained that after judgment had been entered, there were negotiations for settlement by arrangement. At that time, the appellant was making substantial payment by instalments towards another judgment sum in Civil Suit No. 250 of 1968 and clearly any further pressure on him would jeopardise the settlement of this debt without producing any favourable result in the satisfaction of the new claims. The Bank, perhaps not unreasonably, had hoped that so long as the appellant would be making his monthly or periodical payments, it might be in its own interests to give him time to pay off his debts to the Bank. Insofar as the land charged to the Bank was concerned, it was thought that sale by private treaty would fetch a higher sum, especially as the land was without potential for development. But as events showed, other creditors bad also obtained various judgments against the appellant and had taken execution proceedings. It was time for the Bank to act in respect of these two judgment sums which had been entirely unsatisfied.” (own emphasis added) [30] The only reason given by the JCs for the delay in executing the Judgment pertained to the two bankruptcy proceedings (the First BN and Second BN), specifically, the problems they faced regarding those proceedings, as stated earlier. [31] However, a crucial distinction, apparently overlooked previously, is that bankruptcy proceedings are not strictly speaking “execution” proceedings under Order 45 ROC (Perwira Affin (supra); Dr Page 11 of 17 Shamsul Bahar (supra)). The JCs chose or rather made a conscious decision to pursue “enforcement” through bankruptcy proceedings (the two separate bankruptcy proceedings) rather than execution proper: i) The First BN consumed substantial time and resources from 2011 to 2019, encountering various complications including the 2nd Plaintiff’s withdrawal and subsequent appeals up to the Federal Court. ii) After obtaining the First Leave Order in December 2020, the JCs again chose to commence the Second BN rather than pursuing any execution under Order 45 ROC. The Second BN was ultimately struck out in September 2022 due to failure to obtain requisite leave under Section 5(3)(b) Insolvency Act 1967 for proceeding against the JD as guarantor. [32] The delays and complications in this matter stem directly from the JCs’ strategic choice to pursue bankruptcy proceedings exclusively. However, this choice cannot justify their failure to attempt execution under Order 45 ROC. The JCs’ supporting affidavits in respect of the Second Leave Application do not demonstrate: i) Any attempt whatsoever to execute the judgment via the various modes available under Order 45 ROC, either during or parallel to the bankruptcy proceedings; ii) Any impediment that specifically prevented them from pursuing such execution method. iii) Any cogent reason why they could not have attempted execution while the bankruptcy proceedings were ongoing. [33] Order 45 ROC provides specific and comprehensive modes of execution, including: i) Writ of seizure and sale (Order 45 Rule 1(1)(a)); ii) Garnishee proceedings (Order 45 Rule 1(1)(b)); iii) Charging orders (Order 45 Rule 1(1A)(a)); Page 12 of 17 iv) Writ of possession (Order 45 Rule 3(1)). [34] These are specific court processes for enforcing judgments, governed by detailed provisions in the Rules of Court 2012, as opposed to bankruptcy proceedings which: i) Are governed by a separate statutory regime under the Insolvency Act 1967; ii) Have different objectives and requirements; iii) Involve distinct procedures and considerations, particularly for proceeding against guarantors. [35] Instead on initiating or attempting to initiate any execution proceedings under the ROC, namely under Order 45, the JCs, averred via their affidavits, that their focus was entirely on bankruptcy proceedings and appeals as reason for their delay in executing the Judgment. While they were entitled to pursue bankruptcy as an enforcement strategy, this choice does not absolve them of the need to provide cogent reasons under Order 46 ROC for not attempting actual execution of the Judgment. [36] The distinction between bankruptcy proceedings and execution proceedings is not merely technical. Order 46 ROC specifically governs leave for execution, and the requirements thereunder cannot be satisfied merely by showing active pursuit of bankruptcy proceedings. The JCs must demonstrate why they could not execute the Judgment through the prescribed modes under Order 45 ROC. [37] Order 46 ROC must be read with Order 45 ROC. Order 46 Rule 2 ROC specifically states: “When leave to issue any writ of execution is necessary (0.46, r. 2)

A writ of execution to enforce a judgment or order may not be issued without the leave of the Court in the following cases:

where six years or more have lapsed since the date of the judgment or order;” (own emphasis added) Page 13 of 17 [38] Therefore, the Second Leave Application under Order 46 ROC must be in connection with an “execution” of judgments and orders under Order 45 ROC. Bankruptcy proceedings are clearly not execution or enforcement proceedings (Perwira Affin (supra); Dr Shamsul Bahar (supra)). [39] The JCs fundamental failure to show cause for not pursuing execution proper within 6 years of judgment, or to demonstrate any actual impediment to such execution, is fatal to their Second Leave Application. It reflects a conscious litigation strategy rather than a genuine inability to execute the judgment. [40] In fact, the JCs have no intention to initiate execution proceedings and this can be seen from paragraphs 15 and 16 of the JCs’ Affidavit in Support of the Second Leave Application (Enclosure 3) where the JCs stated as follows: “16. Pemiutang-pemiutang Penghakiman tersebut masih berhasrat melaksanakan Penghakiman tersebut melalui prosiding kebankrapan terhadap defendan/penghutang penghakiman kedua.

Dalam semua keadaan ini, memandangkan menurut Seksyen 6 (3) Akta Had Masa 1953 tempoh had masa (12 tahun) untuk mengambil tindakan kebankrapan berdasarkan Penghakiman bertarikh 29.10.2010 akan luput pada 29.10.2022, demi untuk memelihara hak-hak dan kepentingan mereka berkenaan Penghakiman tersebut dan untuk mengambil tindakan kebankrapan terhadap defendan/penghutang penghakiman kedua berdasarkan Penghakiman tersebut, Pemiutang-pemiutang Penghakiman tersebut telah ex abundant cautela membuat permohonan ini tanpa prasangka kepada rayuan-rayuan mereka ke Mahkamah Rayuan terhadap keputusan-keputusan Hakim Yang Arif yang diberikan pada 23.9.2022 dan apa-apa perintah yang bakal diberikan.” (own emphasis added) [41] The position is different in the case of Tio Chee Hing (supra), as the respondent in this case explained the delay in execution by providing several cogent reasons, namely: i) the appellant was making substantial payments by instalments; Page 14 of 17 ii) any further pressure on the appellant would jeopardise the settlement of the debt; iii) the respondent had, not unreasonably, hoped that, as long as the appellant continued making his monthly or periodical payments, it might be in its own interest to give him time to settle the debt; iv) the attempt to sell a charged property by private treaty was with the hope of fetching a higher sum. [42] The JCs’ reason for the delay in the present case is neither comparable to nor as compelling as those in Tio Chee Hing (supra). G] CONCLUSION [43] The heart of this matter lies in the JCs’ own strategic choices in pursuing enforcement of the Judgment. The complications and delays they encountered arose not from any impediment created by the JD, but rather from the JCs exclusive pursuit of bankruptcy proceedings and the procedural difficulties that ensued therefrom. [44] The withdrawal of the First BN after protracted litigation up to the Federal Court, and the striking out of the Second BN for want of leave under Section 5(3)(b) of the Insolvency Act 1967, were direct consequences of the JCs’ own conduct. Throughout this period spanning more than a decade, the JCs had at their disposal the various modes of execution prescribed under Order 45 ROC. They elected not to pursue any of these established enforcement mechanisms. [45] When seeking leave under Order 46 ROC and in particular Order 46 Rule 2, a judgment creditor must demonstrate cogent grounds explaining why “execution” could not be effected (Moez Ali (supra); Tio Chee Hing (supra)). The JCs’ singular focus on bankruptcy proceedings, and the resultant complications thereof, cannot constitute such grounds. Their failure to even attempt any form of execution proper, or to provide any compelling explanation for this omission, is fatal to their Second Leave Application. Page 15 of 17 [46] For these reasons, and those elaborated above, I dismissed this appeal in Enclosure 20 with costs. Dated this 28th day of January, 2025 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) Judge High Court of Malaya, Kuala Lumpur (Commercial Division (NCC 3)) COUNSEL FOR THE 3RD, 5TH, 6TH AND 7TH PLAINTIFFS / JUDGMENT CREDITORS Lua Ai Siew (AiliAlef Hamima Binti Aznan together with her) Messrs Soo Thien Ming & Nashrah Aras 9, Menara Bangkok Bank, Berjaya Central Park, No. 105 Jalan Ampang, 50450 Kuala Lumpur Tel: 03-21819999 Emel: stmnkl@stmnh.com Page 16 of 17 COUNSEL FOR THE 2ND DEFENDANT / JUDGMENT DEBTOR Jasneeta Bhullar Messrs Azmi Fadzly Maha & Sim A4-2-5, Solaris Dutamas, No.1, Jalan Dutamas 1, 50480 Kuala Lumpur Tel: 03-62064220 Emel: general@afa-law.com LEGISLATION / RULES CITED Rules of Court 2012 ▪ Order 45 Rule 1, Rule 1(1)(a) and (b), Rule 1(1A)(a), Rule 3(1); ▪ Order 46 Rule 2 & 3 Insolvency Rules 2017 ▪ Rule 93 Insolvency Act 1967 ▪ Section 5(3)(b) Limitation Act 1953 ▪ Section 6(3)

Affin Bank v. Wan Abdul Rahman [2003] 2 MLJ 609

Dr Shamsul Bahar bin Abdul Kadir v. RHB Bank Bhd [2015] 4 MLJ 1

Kerajaan Malaysia v. Gold Bridge Engineering & Construction Sdn Bhd [2022] MLJU 3075 Page 17 of 17 4. Moez Ali bin Akbarally v. Public Bank Bhd [2021] 5 MLJ 169; [2021]

Malayan Banking Bhd v. Foo See Moi [1981] 2 MLJ 17

Perwira Affin Bank Bhd v. Lim Ah Hee [2004] 3 MLJ 253

Tio Chee Hing v. Chung Khiaw Bank [1981] 1 MLJ 227