Moez Ali Akbarally v Public Bank Berhad (6463-H) (B04(IM)-114-03/2020)

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1 DALAM MAHKAMAH RAYUAN MALAYSIA (BIDANG KUASA RAYUAN) RAYUAN SIVIL NO. B-04(IM)-114-03/2020

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(ii) That since there was no execution, as no writ of execution was issued in relation to the Judgment for more than 6 years, the failure to do so, or delay in doing so, must be explained when seeking leave to execute after 6 years on the Judgment; and

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(iii) That the 2nd Order for leave given on 29.03.2019 that included the order for leave to issue bankruptcy proceedings was wrongly made, as such an order could not be given or made under Order 46 ROC 2012. [10] It was submitted by the Appellants that there was no execution at all carried out on the Judgment for 11 years at the time when the second application for leave to execute was filed on 31.10.2018 despite the Respondent having obtained the 1st Order for leave to execute on 02.10.2015. Therefore, the second application for leave to execute cannot be sustained as there was no execution at all. [11] Further, the Appellant submitted that the provisions of Order 46 r 2(1) and Order 46r 2(3) pertains to the issuance of a writ of execution. A writ of execution under Order 46 r 1 includes “a writ of seizure and sale, a writ of possession and a writ of delivery.” In essence, the law is clear that the issuance of a bankruptcy notice is not a form of execution and 5 this law has been correctly stated in Re a Bankruptcy Notice (1898) 1 QB 383 by English Court of Appeal, that: “The issuing of a bankruptcy notice is clearly not a process of execution upon the judgment.” “It would be impossible to argue that the issue of a bankruptcy notice is a form of execution.” The above case has been referred by the Federal Court in Dr Shamsul Bahar Abdul Kadir & another Appeal v RHB Bank (2015) 4MLJ 1 which ruled that a bankruptcy proceeding was not execution. [12] According to the Appellant this means that the 1st Order for leave to execute was not carried out by the Respondent when it failed to proceed to apply for the issuance of the writ of execution. As a result, it could not be a valid reason for the Respondent to file the 2nd application for leave to execute. [13] Reliance was placed on the case of Affin Bank Bhd v Wan Abdul Rahman bin Wan Ibrahim (2003) 2 MLJ 509 and it was submitted that the Respondent in the 2nd application for leave under Order 46 r 3(1(b) ROC 2012 failed to state reasons in the affidavit of support of the delay in enforcing the Judgment as it is mandatorily required under the ROC. The failure to provide such an explanation is 6 fatal as it could not justify the court invoking the power for making any order or a fresh order for leave to execute the judgment. [14] It is argued that the power of the court under Order 46 is one that is limited to granting leave to execute a judgment and includes the process of issuing a writ of execution within the scope and meaning of Order 46 and it is not about issuing bankruptcy proceedings which is governed by the Insolvency Act and Rules made thereunder. [15] In the instant case, according to the Appellants the Respondent had applied for leave for the second time to issue execution and/or bankruptcy proceedings. In other word, the 2nd leave application was also not sustainable as it was not made within the power mandated under Order 46 as it has nothing to do with the issuance of bankruptcy proceedings. Thus, the 2nd order for leave ought not to be granted when it involved the issuance of bankruptcy proceedings. This makes the 2nd Order for leave bad in law and ought to be set aside. The Respondent’s Submission [16] The Respondent’s position is that the Respondent’s fresh/ 2nd leave to proceed with execution and/or bankruptcy proceeding under Order 46 rule 3 and/or Order 92 rule 4 ROC 2012 is proper and it was made and granted in accordance with the ROC. 7 [17] It was submitted that the Respondent had to file the 2nd leave application to execute and/or proceed with bankruptcy proceeding when the 1st Order for leave was no longer valid and ceases to have effect. This is clearly provided under Order 46 rule 2(3) ROC 2012 that if the writ is not issued within one year from the date of the granting such leave, the order shall cease to have effect, without prejudice to making of a fresh order. [18] In this regard, although the Respondent had proceeded on the 1st leave granted by the Sessions Court on 02.10.2015 by filing the 1st Bankruptcy Notice against both appellant, nevertheless the leave to execute and/or proceed with bankruptcy proceedings were not successful as the 1st BN were eventually set aside. [19] The Respondent submitted it is incumbent upon it to show the court sufficient reasons in support of the application to explain the delay in proceeding with the execution and/or bankruptcy proceedings against the Appellants. As such, the Respondent in its Affidavit in support of the 2nd leave application at the Session Court had given sufficient reasons for the delay in enforcing the Judgment. [20] It was also submitted that the Court of Appeal on 18.07.2017 had dismissed the Appellant’s appeal and confirmed that the 1st Order for leave was valid and effective. Therefore, the learned Sessions Judge after considering the chronology and reasons given by the Respondents 8 was satisfied with the same and made the order. That exercise of discretion was made without fault. [21] The Respondent further pointed out that the Appellants were aware of the amounts owed as can be seen in their proposal letter to the Respondent dated 08.06.2015. Thus, there is no issue of them being led to believe they did not have to pay the Respondent and/or are in way prejudiced. As such, the Respondent should not be deprived of its fruit of litigation. [22] With reference to the case of Dr. Shamsul Bahar Abdul Kadir & Another Appeal v RHB Bank Berhad (2015) 4MLJ 1 it was further submitted that in granting the order for leave under Order 46, ROC 2012, the court has the power to give leave for the issuance of a bankruptcy notice and is not restricted to giving leave for issuing of a writ of execution only. [23] Premised on the above, the Respondent submits that the learned High Court judge did not err in fact or in law in dismissing the Appellant’s appeal and affirming the decision of the learned Session Judge. Finding of Court [24] We have given the above submissions our most anxious and careful consideration. With the greatest of respect to the learned counsel, we do not find any merit in the submissions advanced by the 9 Appellant. For the reasons that we set out below we find the arguments to be highly misconceived. [25] It must be stated at the outset that learned counsel was being pedantic when submission was made that no execution was taken until the 2nd leave application was made. Here what learned counsel wanted to emphasis was that no writ of execution was taken. But the fact remained. bankruptcy proceeding was taken. That proceedings of course came to a premature end when Appellants succeeded on what could be said on technical grounds. It must be mentioned that in all this that the 1st Order for leave despite the same being attached, remains valid. That was conformed by the earlier order of the Court of Appeal. [26] In short it is not true to say that the Respondent had not taken any action upon 1st Order for leave being given. In actual fact the Respondent’s attempt to execute the Judgment was not successful. Since the Judgment was still valid, the Respondent was obviously entitled to execute the Judgment as limitation for execution had not set in. [27] Much time was devoted by learned counsel to emphasis on the absence of reasons for making the 2nd leave application. Learned counsel was categorical in his submission. With respect we find that to be plainly gross overstatement. The learned High Court Judge had dealt with the alleged delay of the execution as follows: - 10 “28. Dalam affidavit sokongan tersebut Ekshibit “A-1”, saya mendapati terdapat penjelasan bahawa permohonan ini adalah untuk penghakiman bertarikh 11.04.2007 dan telah terakru sebanyak RM226,539.55 setakat 11.04.2013 [selaras dengan Kaedah 3(2)(a)]. Penjelasan juga diberikan oleh Responden berhubung dengan kelewatan memfailkan permohonan kebenaran ini iaitu perlu menyelesaikan rayuan-rayuan yang difailkan oleh Perayu-Perayu [Kaedah 3(2)(c)]. Juga terdapat maklumat lain yang dikemukakan seperti permohonan affidavit sokongan dan salinan perintah kebenaran terdahulu selaras dengan Kaedah 3(2)(e) di ekshibit “A-2” dan “A-3”. [28] Further, at paragraph 29 the learned High Court Judge concluded as follows: - “29. Berdasarkan kepada penemuan ini, saya berpuas hati bahawa Responden telah mematuhi peruntukan Aturan 46, KKM 2012 dalam membuat permohonan telah memberikan penjelasan yang munasabah serta menunjukkan keadaan khas dalam penjelasan tersebut dan tidak pernah pada setiap masa material mengabaikan atau mengenepikan haknya untuk meneruskan tindakan pelaksanaan terhadap Perayu-Perayu. Saya mengguna pakai nas-nas yang dikemukakan Perayu-Perayu bagi penemuan ini iaitu kes Duer v Frazer (2001) 1WLR 919 QBD, Dipika Patel v Sarbjit Sing (2002) EWCA Civ. 1938 SC and kes Affin Bank Bhd v Wan Abdul Rahman bin Wan Ibrahim (2003) 2 MLJ 509 CA. 11 [29] Thus the Appellant’s submissions on the absence of explanation is nothing but a red-herring. [30] We have carefully scrutinised the appeal record and find that the learned Sessions Judge had properly exercised the discretion and correctly made the 2nd Order for leave and that the High Court was correct in not disturbing the exercise of that discretion. [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 6 years then leave ought to be given, after all a judgment could not be defeated unless it is time barred. We must also state that laches must not apply in the process of execution of a judgment. What we have stated here is plain from a reading of Order 46 rule 2(3) 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. [32] We shall also address the Appellants’ contention that under Order 46 of the ROC the only leave that could be given is for leave to issue a writ of execution and since the writ of execution is define to exclude 12 bankruptcy proceeding then in so far as the leave purports to give leave to issue bankruptcy proceeding that 2nd Order for leave is ineffective and null and void. Further it is to be recalled that learned counsel took pains to bring emphasis the ratio Dr. Shamsul Bahar Abdul Kadir & Another Appeal (supra) that a bankruptcy proceeding is not a writ of execution. [33] We find learned counsel appears not to have fully understood the effect of the said decision of the Federal Court. We find the following statements, as summarised by the editors of the Malayan Law Journal, to accurately reflect the essence of the decision in that case: - “(1) A judgment creditor who commenced bankruptcy proceeding after more than six years had elapsed from the date of the judgment must obtain prior leave of court pursuant to O 46 r 2 of the ROC. The BN in the instant case was issued after the judgment was more than six years old. When the BN was issued, the respondent was not in position to execute the judgment without leave of court. Leave should have been obtained. In that it was not obtained, the respondent was not in a position to execute the judgment and therefore was not entitled to issue the BN (see para 62);

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(2) A bankruptcy proceeding was not execution. But a creditors’ right to issue bankruptcy was pegged to his right to proceed to execution. A creditor was not entitled to issue bankruptcy if he was not in a position to issue execution on the judgment at the time the BN was issued. If by reason of the rules of court or on account of some valid legal reason, a creditor was not in a 13 position to issue execution at the time he issued the BN, then the creditor had no right to issue bankruptcy. It was as simple as that (see paras 55, 56).

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(3) Ex parte Woodall was the first and foremost authority to be followed on the meaning of the words execution thereon not having been stayed and the meaning of that phrase should be construed in the context of s 3(1)(i) of the BA and not from the perspective of s 6(3) of the LA. Section 6(3) of the LA should not be read to nullify O46 r 2 of the ROC. Order 46 r 2(1)(a) was not incompatible with s 6(3) of the LA (see para 59).

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(4) The enunciation by the English courts on the meaning and application of the words execution thereon not having been stayed was eminently relevant as that phrase first appeared in s 4(1)(g) of the English Bankruptcy Act 1883 and has remained substantially unchanged in English and Commonwealth bankruptcy legislation from 1883 to the present day. Those words have been construed by English courts not to mean that bankruptcy was a form of execution and therefore had to comply with the rule of court relating to execution, but to mean that a creditor must be in a position, when issuing a BN, to levy immediate execution upon the judgment, should he choose to levy execution (see paras 16, 23 & 25).” [34] It is our considered view that from the decision above, it is clear that although a bankruptcy proceeding was not an execution but the creditors right to issue bankruptcy proceeding was pegged to his right to proceed with an execution. Thus, the court in giving leave to execute 14 may also give leave for the proceeding with bankruptcy proceeding after a lapse of 6 years. It is unnecessary for us to state the obvious but for avoidance of doubt that power is exercisable upon a reading of Order 46 and Order 92 r 4 of the ROC. CONCLUSION [35] Based on the forgoing reasons, we dismissed the Appellants’ appeal. However, given the fact pattern of this case we make no order as to costs. Dated: 17 Jun 2021 -Sgd-AHMAD NASFY YASIN Judge Court of Appeal Malaysia Putrajaya Counsel/Solicitors For the Appellant: Amarjeet Singh a/l Mehar Singh Avtar Singh a/l Prem Singh [Messrs. Zubeda & Amarjeet] For the Respondent: Shantini Koshy [Messrs. Yong & Rakan-rakan]