ONG THENG YEOW (Berniaga atas nama dan gaya SMART KEY RESOURCES (No.Pendaftaran 200403162863(CA0087094-W) v ROZITA BINTI BAHAROM (PA-29NCC-610-12/2023)

ONG THENG YEOW

ONG BENG THEAM

ONG TEONG LAM (NO. K/P: 810727-08-5733) Berniaga atas nama dan gaya SMART KEY RESOURCES [No. Pendaftaran: 200403162863 (CA00087094-W] …PEMIUTANG-PEMIUTANG PENGHAKIMAN JUDGMENT (APPEAL AGAINST REGISTRAR’S DISMISSAL OF CREDITOR’S PETITION) PRELUSION [1] The judgment creditors (JCs) got a judgment against the judgment debtor (JD) in a civil suit. With the judgment, the JCs commenced bankruptcy proceedings against the JD. Page 2 of 11 [2] The JD asserts that the bankruptcy notice (BN) was not properly served on the JD. The JD also asserts that the creditor’s petition (CP) was not properly served on the JD. The JD applied to set aside the BN. [3] At the CP hearing, the Registrar dismissed the CP. The JCs filed an appeal to the Judge in chambers against the Registrar’s decision. [4] Should the JCs’ appeal be allowed i.e. the Registrar’s decision is reversed—which means that the CP is not dismissed? Or should the JC’s appeal be dismissed i.e. the CP stands dismissed? PERTINENT CHRONOLOGY OF FACTS [5] The pertinent chronology of facts for this Appeal can be summarised as follows—

October 2022—The JD borrowed RM200K from the JCs. The JD was to repay the loan by ten monthly instalments of RM23K each. If the JD defaulted, an 8% per annum interest would be charged on the arrears outstanding.

November 2022 to February 2023—The JD paid four repayment instalments and then defaulted.

May 2023—The JCs filed a suit at the Butterworth Sessions Court against the JD for RM138K.

June 2023 (1.6.2023)—A judgment in default was entered against the JD.

December 2023 (18.12.2023)—The JCs commenced this bankruptcy proceeding against the JD.

1.3.2024—The JCs assert that the BN was personally served on the JD. Diametrically contrary to the JCs’ assertion, the JD asserts that the BN was not properly served on her. Page 3 of 11

4.3.2024—This was a case management date. This case management was at the stage of the bankruptcy proceeding where the CP was not yet served on the JD. The JD’s solicitors were present. The JCs assert that at this case management, the JD’s solicitors represented to the Court that the JD accepts that the service of the CP on the JD’s solicitors would be adequate service.

15.4.2024—The JCs filed the CP.

18.4.2024—The JCs served the CP on the JD’s solicitors.

8.5.2024—The JD filed an application to set aside the BN (Application to set aside the BN). The Court issued a notice to the JD that the JD paid insufficient filing fees for the Application to set aside the BN.

9.5.2024—The CP hearing. The Registrar dismissed the CP. The Registrar also considered the JD’s Application to set aside the BN. As the CP was dismissed, the Registrar found that the JD’s Application to set aside the BN was rendered academic, and struck it out.

23.5.2024—The JCs filed a Notice Of Appeal To Judge In Chambers against the Registrar’s decision on 9.5.2024 (this Appeal). THE TERMS OF THE ORDER APPEALED AGAINST [6] In this Appeal, the JD appeals against the Registrar’s Order dated 9.5.2024, which was that the CP was dismissed with no costs and the RM2K deposit was to be returned to the JCs. Note: the Registrar’s Order dated 9.5.2024 did not relate to the JD’s Application to set aside the BN. Page 4 of 11 WAS AN ACT OF BANKRUPTCY COMMITTED? [7] I find that the BN was served personally on the JD. The evidence of personal service is found in the JCs’ affidavit of service of the BN. The JCs exhibited the signed acknowledgement of service on the JCs’ solicitors’ cover letter issued for the purpose of serving the BN. The date and time in the acknowledgement of service were stated as “1.3.2024” and “4.30 ptg” i.e. 4.30 p.m. [8] Further, the JCs’ process server (who affirmed the affidavit of service) averred that on 1.3.2024, he received a telephone call from the JD’s husband. The process server cited the JD’s husband’s telephone number in the affidavit of service. The process server averred that the JD’s husband asked to meet with him to accept the service of the bankruptcy cause papers. The JCs’ process server averred that at about 4.30 p.m., he served the bankruptcy cause papers, which included the BN, on the JD. The JCs’ process server also exhibited photographs relating to the service, which included a photograph of the JD taking a snapshot of what appears to be a signed letter with documents enclosed, with her mobile phone. The JDs’ process server averred that the service took place at the Taman Pauh Jaya business complex. [9] Against these averments and documentary exhibits in the JCs’ affidavit of service, the JD, in her affidavit in support of the Application to set aside the BN—

averred that she was advised by her solicitors that the JCs had failed to adequately serve the BN on her;

averred, as a fact, that the JCs had failed to adequately serve the BN on her; Page 5 of 11

averred that her address was known to the JCs, but the JCs failed to serve the BN at her address;

averred that there was no proof of her receiving the BN. [10] In the context of these contrary averments by the JCs and the JD, I find, on the balance of probabilities, that the JCs’ averments (as well as their process server’s averments) are credible, whilst the JD’s averments are not. I hence find that the JCs had personally served the BN on the JD. [11] Accordingly, I find that the JD committed an act of bankruptcy on 9.3.2024, under section 3(1)(i) of the Insolvency Act 1967 (IA 1967). If the JD did not pay the sum demanded in the BN “within seven days” after the date of the service of the BN (which took place on 1.3.2024), she would have committed an act of bankruptcy (on the eighth day after the date of service). [12] The pertinent portions of section 3(1)(i) are set out below (with my emphases added), for reference— Section 3. Acts of bankruptcy.

A debtor commits an act of bankruptcy in each of the following cases: .

if a creditor has obtained a final judgment…against him…has served on him in Malaysia…a bankruptcy notice under this Act requiring him to pay the judgment debt…and he does not within seven days after service of the notice…comply with the requirements of the notice… [13] Then under section 5(1)(c) of the IA 1967, the JCs can file a CP against the JD within six months of the JD’s act of bankruptcy. The JCs Page 6 of 11 filed the CP on 15.4.2024—within the required six months from the date of the JD’s act of bankruptcy (9.3.2024). [14] Section 5(1)(c) is set out below (with my emphases added), again for reference— Section 5. Conditions on which creditor may petition.

A creditor shall not be entitled to present a bankruptcy petition against a debtor unless— .

the act of bankruptcy on which the petition is grounded has occurred within six months before the presentation of the petition; THE HEARING OF THE CP ON 9.5.2024 AND MY REMARKS ABOUT THE CONDUCT OF COUNSEL AND SOLICITORS [15] Parties (through their counsel or solicitors) inform me that there were no grounds given by the Registrar for the decision made on 9.5.2024 to dismiss the CP. Parties inform me that there were no written submissions filed for the CP hearing, which was first fixed for 2.5.2024, nor for the later adjourned hearing on 9.5.2024. [16] The JD’s counsel/solicitor submits that the CP was heard on its merits. The JCs’ counsel/solicitor submits that the CP was not heard on its merits. [17] I find these diametrically opposing submissions (and positions taken) from competing counsel/solicitor peculiar, and incredible, particularly because they both attended the CP hearing on 9.5.2024. And so I am compelled to look into the Court file’s minutes or Notes Of Page 7 of 11 Proceedings to find out what transpired at the 9.5.2024 CP hearing before the Registrar. [18] The Notes Of Proceeding entered by the Registrar for the 9.5.2024 CP hearing disclose that there was indeed a hearing, the respective parties submitted orally, and the parties were heard on their respective submissions. [19] I am therefore compelled to remark that counsel and solicitors— who are advocates and solicitors of the High Court—must be forthright with the Court and precise in what they submit in court proceedings. When a fact occurred, they must say that it occurred, and they must say exactly how it occurred. They must put no spin on it. They must neither exaggerate nor understate. They must not enhance or downplay. And when a fact occurred in a particular way, they must concede that it occurred in that particular way, and not attempt to present that it occurred in another way. Advocates and solicitors have a duty to exercise candour. There is more about this below. THE ISSUES AND MY FINDINGS [20] From a reading of the Registrar’s Notes Of Proceedings, I now know the issues that were argued and the grounds for his 9.5.2024 decision. The service of the BN [21] The JD raised the issue of whether the BN was properly (personally) served on her. It is worth reiterating that the JCs assert that the BN was served personally on the JD on 1.3.2024, after the JD’s husband contacted the JCs’ process server, and he served it on the JD Page 8 of 11 at the Taman Pauh Jaya business complex. The JCs’ affidavit of service affirmed by the JCs’ process server proves these facts. [22] All that the JD did to address this issue of the service of the BN, was to contend—in her affidavit in support of her Application to set aside the BN—that the BN was not properly served on her. She did not condescend to particulars. She did not refute and specifically address the signed acknowledgement of receipt on the JCs’ solicitors’ cover letter when the personal service was effected on her. [23] The JD—by her written submissions filed for this Appeal— submitted other facts that were not contained in the affidavit evidence. For example, the 2nd service of the BN was acknowledged not by the JD but by the JD’s mother. And the 3rd service of the BN was acknowledged again not by the JD but by the JD’s husband. Such facts were not averred to in the affidavit evidence produced by the JD. [24] I am compelled to remark here that an Advocate and Solicitor should not, and cannot, submit facts that were not averred to by affidavit evidence, or by pleadings. An Advocate and Solicitor must not embellish (add to) or euphemise (delete from) the affidavit evidence. They are dutied not to do that. It may be tantamount to misleading the Court. And it may lead the Court to make an incorrect decision. [25] I find, on the balance of probabilities, and on the evidence actually produced in the competing affidavit evidence, that the BN was served personally on the JD. Page 9 of 11 The service of the CP [26] As for the service of the CP, the JD similarly raised the issue of whether the CP was personally served on her. In opposing the CP, the JD asserts that the JCs did not comply with Rule 108 of the Insolvency Rules 2017 (Insolvency Rules). Rule 108 provides that a CP must be personally served. [27] Rule 108 of the Insolvency Rules is set out below (with my emphases added)— Rule 108. Personal service A creditor’s petition shall be personally served and the service shall be effected by an officer of the court or by the creditor or his solicitor or a person in their employment by delivering a sealed copy of the petition to the debtor. [28] The JD also relied on the Court Of Appeal case law authority of Lim Boon Kiak v Affin Bank Bhd [2013] 4 AMR 303 (CA); [2013] 6 CLJ 579; [2013] 5 MLRA 381; [2014] 1 MLJ 439, which reinforces the principle that a CP must be served personally, and as such, service of the CP on a judgment debtor’s solicitors is not proper service, particularly when there is no “clear indication (in writing)” that the solicitors have the authority to accept the service of the bankruptcy cause papers that require personal service. [29] To counter the JD’s point, the JCs submit that the JD’s solicitors attended the 4.3.2024 case management and represented to the Court, and to the JCs’ solicitors (who also attended the case management), that the service of the CP on them—the JD’s solicitors—is sufficient Page 10 of 11 service. The JCs argue that by serving the CP on the JD’s solicitors, the JCs merely did what the JD herself asked the JCs to do—to serve the CP on her solicitors. [30] I am, however, of the view that—

there is no clear indication in writing that the JD’s solicitors had the authority to accept the personal service of the CP on the JD’s behalf, or that the JD waived her rights under Rule 108 to be served personally with the CP; and

there is no intrinsic circumstance or reason that justifies the JCs’ non-compliance with the mandatory requirements for the JCs to serve the CP personally on the JD. (The mandatory procedural requirements for the service of the CP on a judgment debtor are set out in Rule 108 (for personal service), Rule 109 (for substituted service when personal service cannot be effected), and Rule 110 (that the service of the CP must be proved by affidavit evidence)). [31] As such, in this bankruptcy proceeding, I find that the CP was not personally served on the JD, as mandated by the Insolvency Rules, and hence not properly served on the JD, rendering the CP defective. And this defect causes the CP to be incompetent. This defect, which renders the CP incompetent, is not curable without causing any prejudice to the JD. Instead, it is a defect that is fatal to the JCs’ CP. [32] I therefore find that the JCs’ CP was rightly and justly dismissed. Page 11 of 11 CONCLUSION [33] For these reasons, I dismiss the JCs’ Appeal. I uphold the Registrar’s decision to dismiss the CP. I order costs of RM5K to be paid by the JCs to the JD. Costs are subject to the allocatur. Dated: 24 December 2024 KENNETH ST JAMES Judge Penang High Court Counsel/Solicitors: For the Judgment Creditor—Lim Kian Leong [Messrs. Lim, Lim & Associates (Bukit Mertajam)] For the Judgment Debtor—Sheshalini [Messrs. Mahen & Co. (Georgetown)] Legislation referred to:

Section 3(1)(i) of the Insolvency Act 1967.

Section 5(1)(c) of the Insolvency Act 1967.

Rule 108 of the Insolvency Rules 2017.

Rule 109 of the Insolvency Rules 2017.

Rule 110 of the Insolvency Rules 2017. Cases referred to:

Lim Boon Kiak v Affin Bank Bhd [2013] 4 AMR 303 (CA); [2013] 6 CLJ 579; [2013] 5 MLRA 381; [2014] 1 MLJ 439.