AmBank (M) Berhad & 6 Lagi v Lim Sue Beng (03-1-03/2018 (W))

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, CAWANGAN LABUAN [dahulunya dikenali sebagai The Development Bank of Singapore Limited (Cawangan Labuan)]

3.

MALAYAN BANKING BERHAD [yang menerima pindahmilik keseluruhan aset dan liabiliti Maybank Finance Berhad yang telah diletakhak menurut Perintah Mahkamah bertarikh 17.8.2004 dan Maybank Investment Bank Berhad (dahulunya dikenali sebagai Aseambankers Malaysia Berhad menurut Perintah Mahkamah bertarikh 21.5.2007]

MALAYSIAN INDUSTRIAL DEVELOPMENT

CIMB BANK BERHAD [dahulunya dikenali sebagai Bumiputra-Commerce Bank Berhad yang telah mengambil-alih keseluruhan perniagaan-perniagaan, aset dan liabiliti Southern Bank Berhad]

AFFIN BANK BERHAD .. APPELLANTS AND LIM SUE BENG .. RESPONDENT 2 [In The Matter of Court of Appeal of Malaysia (Appellate Jurisdiction) Civil Appeal No. W-03(IM)-46-04/2016 Between Lim Sue Beng .. Appellant And

RHB Bank Berhad

AmBank (M) Berhad [dahulunya dikenali sebagai AmFinance Berhad, yang menerima segala aset, hak dan liabiliti serta perniagaan AmBank Berhad menurut Perintah Mahkamah bertarikh 18.5.2005]

DBS Bank Ltd, Cawangan Labuan [dahulunya dikenali sebagai The Development Bank of Singapore Limited (Cawangan Labuan)]

Alliance Merchant Bank Berhad

Malayan Banking Berhad [yang menerima pindahmilik keseluruhan aset dan liabiliti Maybank Finance Berhad yang telah diletakhak menurut Perintah Mahkamah bertarikh 17.8.2004 dan Maybank Investment Bank Berhad (dahulunya dikenali sebagai Aseambankers Malaysia Berhad menurut Perintah Mahkamah bertarikh 21.5.2007]

Malaysian Industrial Development Finance Berhad

CIMB Bank Berhad [dahulunya dikenali sebagai Bumiputra-Commerce Bank Berhad yang telah mengambil-alih keseluruhan perniagaan-perniagaan, aset dan liabiliti Southern Bank Berhad]

Affin Bank Berhad .. Respondents] 3 [In the Matter of High Court of Malaya at Kuala Lumpur (Commercial Division) Bankruptcy No: 29-750-2011 Re: Lim Sue Beng .. Judgment Debtor Ex parte:

RHB Bank Berhad

AmBank (M) Berhad [dahulunya dikenali sebagai AmFinance Berhad, yang menerima segala aset, hak dan liabiliti serta perniagaan AmBank Berhad menurut Perintah Mahkamah bertarikh 18.5.2005]

DBS Bank Ltd, Cawangan Labuan [dahulunya dikenali sebagai The Development Bank of Singapore Limited (Cawangan Labuan)]

Alliance Merchant Bank Berhad

Malayan Banking Berhad [yang menerima pindahmilik keseluruhan aset dan liabiliti Maybank Finance Berhad yang telah diletakhak menurut Perintah Mahkamah bertarikh 17.8.2004 dan Maybank Investment Bank Berhad (dahulunya dikenali sebagai Aseambankers Malaysia Berhad menurut Perintah Mahkamah bertarikh 21.5.2007]

Malaysian Industrial Development Finance Berhad

CIMB Bank Berhad [dahulunya dikenali sebagai Bumiputra-Commerce Bank Berhad yang telah mengambil-alih keseluruhan perniagaan-perniagaan, aset dan liabiliti Southern Bank Berhad]

Affin Bank Berhad .. Judgment Creditors] 4 Coram: Azahar Mohamed, FCJ Balia Yusof Wahi, FCJ Alizatul Khair Osman Khairuddin, FCJ Rohana Yusuf, FCJ Mohd Zawawi Salleh, FCJ JUDGMENT OF THE COURT Introduction [1] This appeal arises from the decision of the Court of Appeal allowing the respondent’s appeal and reversing the order of the High Court. The Court of Appeal allowed the appellants’ application and ordered that one of the judgment creditors, RHB Bank Berhad (“RHB”) do cease to be a party to the bankruptcy proceedings and that consequential amendments be made to the bankruptcy notice and creditors’ petition. Background facts [2] The appellants and RHB collectively brought an action under Suit No. MTKL D5-22-1648-2005 (“Suit”) in respect of a syndicated loan granted to Gula Perak Berhad. The respondent stood as a guarantor to that loan facility and was joined in the Suit as a defendant in that capacity. 5 [3] After a full trial, on 29.10.2010, a joint judgment (“Judgment”) was obtained by the appellants and RHB against the respondent in the Suit. [4] Subsequently, on 24.2.2011, the appellants and RHB as judgment creditors collectively commenced bankruptcy proceedings against the respondent. The bankruptcy proceedings were based on the Judgment. [5] The act of bankruptcy grounding the creditor’s petition dated 25.11.2011 was the failure of the respondent to comply with a bankruptcy notice issued jointly by the appellants and RHB dated 24.2.2011. [6] The respondent then issued a letter dated 30.9.2015 to RHB and proposed a full and final settlement of the portion of the judgment debt due to RHB by the payment of RM3,851,200.00. [7] By a letter dated 15.12.2015, RHB informed the appellants’ solicitors that the debt payable by the respondent to RHB had been fully settled and accordingly it intended to withdraw itself as a party in the bankruptcy proceedings against the respondent. It is a term of the settlement that RHB will upon full payment of the settlement sum seek leave to withdraw the bankruptcy proceedings against the 6 respondent. The respondent had fully paid the settlement sum. These facts are not in dispute. [8] Then dispute in the present matter arose. As RHB was no longer desirous of continuing as a party in the bankruptcy proceedings, by a summons in chambers dated 16.12.2015 (enclosure 46), the appellants and RHB collectively applied for, among others, an order pursuant to section 93(3) of the Bankruptcy Act 1967 (the BA 1967), Order 15 rule 6(2)(a) and Order 20 rule 8 of the Rules of Court 2012 (the 2012 Rules), as well as rule 276 of the Bankruptcy Rules 1969 (the 1969 BR), that RHB do cease to be a party to the bankruptcy proceedings and that consequential amendments be made to the bankruptcy notice and the creditors’ petition to remove references to RHB. Enclosure 46 is the subject matter of the present appeal. [9] The respondent opposed enclosure 46. The respondent anchored his opposition on the primary ground that the application was misconceived and thus an abuse of process. The essential point made by the respondent was that given the settlement between the respondent and RHB, the appellants were not entitled to rely on the original act of bankruptcy. Premised on this, it was argued that the amendment to the bankruptcy notice could not 7 validly be treated as having retrospective effect. Further, as the BA 1967 did not make provision for the withdrawal of a co-petitioner in the manner proposed, the circumstances did not validly allow for the proposed amendments to the creditor’s petition. Decision of the High Court [10] The High Court allowed the appellants’ application in enclosure 46. In its judgment, the High Court made numerous findings, which can be summarised as follows: i. Since enclosure 46 is not for the substitution of a judgment creditor or a change of carriage of petition, the issue of section 95 of the BA 1967 and paragraphs 173 and 174 of Halsbury Laws of England, are not relevant. In cases involving substitution and change of carriage, they are only relevant where the judicial creditor does not proceed with due diligence or has no intention to prosecute the petition, and other judgment creditor want to continue with the proceedings. In this case there is no issue of intention for the other 7 judgment creditors wanting to continue with the petition. ii. Section 93(3) of the BA 1967, read with rule 267 of the 1969 BR meant that the 2012 Rules is applicable where 8 the provisions on amendment and parties are silent in the BA 1967 and the 1969 BR. Thus Order 15 rule 6 and Order 20 of the 2012 Rules are applicable. iii. The application for leave for RHB to cease to be a party in these proceedings should be allowed as the sum payable by the respondent to RHB Bank has been settled. iv. In view of RHB ceasing to be one of the judgment creditors, then the amount owing must necessarily be reduced to reflect the true sum owing under the bankruptcy notice and the creditor’s petition. The reduced sum, which is still above the statutory minimum limit, can still form the basis of the bankruptcy notice and the creditor’s petition. Decision of the Court of Appeal [11] Against the decision of the High Court, the respondent appealed to the Court of Appeal. The Court of Appeal allowed the appeal and as indicated earlier reversed the order of the High Court. [12] The Court of Appeal held that in the exercise of its bankruptcy jurisdiction, the High Court has no power to grant the appellants’ 9 application as that there is no express provision in the BA 1967 to allow amendment to withdraw and substitute petitioner save and except in accordance with section 95 of the BA 1967. [13] The Court of Appeal further held that the appellants could not resort to rule 276 of the 1969 BR. The proper course of action is for the appellants to file a fresh bankruptcy proceeding against the respondent. The question of law on appeal to the Federal Court [14] The appellants then filed a motion to seek leave to appeal to the Federal Court. This Court granted the appellants leave to appeal on the following question of law: “Whether in the case of petition presented by multiple petitioners, could the bankruptcy notice and creditor’s petition be amended - the deletion of one or more petitioners be allowed under section 93(3) of the Bankruptcy Act 1967 and/or rule 276 of the Bankruptcy Rules 1969.” [15] The point in this appeal is a very short but an important point which revolves around the proper construction of section 93(3) of the BA 1967 and rule 276 of the 1969 BR. 10 [16] To start with, it is necessary for contextual apprehension and appreciation to set out both the provisions. The two provisions are these: Section 93(3) of the BA 1967

The court may at any time amend any written process or proceeding upon such terms, if any, as it thinks fit to impose. Rule 276 of the 1969 BR “In the absence of any rule regulating any proceeding under the Act or these Rules, the Rules of the High Court shall apply, mutatis mutandis.” [17] At the outset, it must be stated that the BA 1967 is a complete code within the framework of which must be found all the powers exercisable by the High Court in bankruptcy jurisdiction when dealing with the subject matter of bankruptcy (see Malaysia Building Society Bhd v Tan Sri General Ungku Nazaruddin Ungku Mohamed [1998] 2 CLJ 340). [18] A key point to note is that the Suit was collectively brought by the appellants together with RHB in respect of a syndicated loan. The respondent stood as a guarantor to that loan and was sued as a defendant in that capacity. It is not disputed that even though the 11 Judgment provided for specific amounts to be paid to each of the appellants and RHB, their respective entitlements were stated within a single judgment. Each of the appellants and RHB had to refer back to the Judgment to establish their respective interests under the same. [19] It is also an important point to bear in mind that the appellants and RHB collectively issued the bankruptcy notice. Similarly, they presented the creditor’s petition on 25.11.2011. The appellants and RHB in this case had elected to proceed collectively on the strength of a single Judgment; this was central to the character of the bankruptcy notice and the creditor’s petition. [20] It is against the above background that we should consider the appellants’ application in enclosure 46, which sought for leave from the High Court for RHB, one of the co-petitioners in the creditor’s petition who had initially elected to proceed collectively pursuant to a single Judgment against the respondent to cease to be a party to the bankruptcy proceedings commenced against the respondent. In addition to the prayer for the cessation of RHB as a party to the proceedings, the appellants had also sought for leave for certain consequential amendments to be made to the bankruptcy notice and the creditor’s petition. 12 [21] It is plain for us to see that these amendments would have the effect to change the bankruptcy notice, which form the basis or substance of the creditor’s petition being issued as if RHB was never a party to the bankruptcy proceedings from the outset. If such amendments were not made the creditor’s petition would not be able to proceed as proposed. The amendments reflect the change in the bankruptcy notice as well as the creditor’s petition. Section 93(3) of the BA 1967 [22] This brings us to section 93(3) of the BA 1967, which under the legislation is the only provision that allows for any amendment to the “written process or proceeding”. However, the exercise of the High Court’s powers under the provision is limited to clerical or minor errors that cause no prejudice to the judgment debtor. This can be seen in the cases cited by learned counsel for the respondent. [23] First, the case of Amit Chhabra Ashok Kumar Chhabra v A2k Vision Pte Ltd [2013] 1 LNS 94 where the High Court allowed an amendment to include the second judgment creditor’s name on the bankruptcy notice as it was inadvertently omitted. It was correctly held that the judgment debtor would not be in any way prejudiced by the amendment. 13 [24] The next case cited by learned counsel for the respondent is Re Liow Fong Mooi, Ex P Malayan Banking Bhd [2000] 6 CLJ 63, where there was amongst others, an error in stating the date of the act of bankruptcy. The High Court allowed the proposed amendment to the same. The High Court found that the amendment was merely to correctly state the date on which the act of bankruptcy occurred and to that extent must be regarded as a technical one which did not go to the substance of the creditor’s petition. [25] On the other hand, learned counsel for the appellants brought our attention to two cases to support her arguments that under section 93(3) of the BA 1967, the High Court has the power to amend bankruptcy proceedings and process to add or remove petitioner in the manner advocated in enclosure 46. These cases were decided on the basis of the Bankruptcy Act 1914 of the United Kingdom, which is equivalent to our section 93(3) of the BA 1967. [26] First, the case of Ex parte Dearle [1884] 14 QBD 184. In this case, the petition presented by a bare trustee was dismissed because the law requires the cestui que trust to be joined as co-petitioner. The Court of Appeal allowed the appeal and granted 14 leave to amend the petition to add the cestui que trust. Lord Coleridge CJ held as follows: “Then arises the question whether we ought to allow an amendment of the petition. I think we have clearly power to do so under section 105, and the only question is whether the case is a proper one for the exercise of the power? I think it is. A blunder by no means unnatural has been made in the construction of the Act; it is a mere slip. I think it would be just to allow the name of the sister, on proper terms, to be added as a co-petitioner, and that the proceedings should then be continued with the addition of her name; but I think that the person who has made the blunder must pay for it. The appellant will have a week within which to make the amendment, for which he must obtain the consent of his sister, and he must pay the costs of the appeal, and the costs (if any) occasioned by the amendment. The petition when amended must be reserved within a week. The amendment must be taken to have been made at the time when the petition was presented.” [27] The second case referred to by learned counsel for the appellants is Lovell and Christmas v. Gilbert Walter Beauchamp [1894] AC 607 (HL). In this case, judgment was entered against the firm of Beauchamp Brothers. The respondent was a partner in the firm and he was an infant. Based on the judgment, bankruptcy proceedings were taken against the firm, and receiving order was 15 made against Beauchamp Brothers. The Court of Appeal upon the ground that one of the partners of Beauchamp Brothers being an infant the receiving order could not properly be made against the firm rescinded the order. On appeal to the House of Lords, Lord Herschell held as follows: “Supposing the judgment thus amended, I think the bankruptcy proceedings may be amended in conformity therewith by adding throughout after the words ‘Beauchamp Brothers’ the words ‘other than Gilbert Walter Beauchamp’. The Bankruptcy Act gives ample powers of amendment. By sect. 105 the Court may at any time ‘amend any written process or proceeding under this Act or such terms, if any, as it may think fit to impose’. Instead, therefore, of setting aside the receiving order, I think the proper course will be to amend it in the manner which I have suggested. It will thus constitute as from its date a valid receiving order against Ralph Beauchamp, and I think the receiver appointed under that order should also be appointed receiver of the partnership assets for the purpose of protecting them for the benefit of the creditors.” [28] In our opinion the cases relied by counsel for the appellants do not support her submission. It does not take the appellants’ case any further. The first case as aptly described by Lord Coleridge CJ, “a mere slip”, was to amend the petition to add the 16 cestui que trust, which cause no prejudice to the judgment debtor. It was not a fatal error. While the second case was an application to correct the name of the party, which was a correctible clerical defect that must be regarded as a technical error which did not go to the substance of the creditor’s petition. These cases fall more within the principle that the exercise of the High Court’s powers under section 93(3) of the BA 1967 is limited to correctible clerical or minor error, which cause no prejudice to the judgment debtor. [29] However, as seen earlier, the proposed amendments in our present case are not due to a minor or clerical error made by the appellants but instead an attempt to withdraw a party namely RHB. The appellants and RHB had elected to proceed collectively in pursuing bankruptcy proceedings against the respondent. Clearly, the High Court erred in treating enclosure 46 as an application to correct a misnomer and or a formal defect in the bankruptcy notice and creditor’s petition when the case was concerned with substantive change to the character of the bankruptcy notice upon which the creditor’s petition was issued. In our opinion, the appellants are not permitted to change the character of the bankruptcy notice and creditor’s petition in the manner it was done in this case. The creditor’s petition was filed on the basis of a 17 specific act of bankruptcy. The judgment creditors elected to proceed collectively and they must live with their election to do so. Having filed the creditor’s petition on the basis that the respondent’s failure to comply with the bankruptcy was an act of bankruptcy, it was not open to the appellants, to recharacterise the creditor’s petition as having been grounded on a different act of bankruptcy, i.e. as involving only the appellants, excluding RHB. The proposed amendment would therefore cause prejudice to the respondent. In our opinion, the proposed amendments in the present case go to the substance of the bankruptcy notice and creditor’s petition and could not be regarded as a technical one or a mere slip. Hence, in the present case section 93(3) of the BA 1967 could not be invoked for the purposes of enclosure 46. [30] There are no provisions in the BA 1967 and the 1969 BR that allow a co-petitioner to withdraw as a party to the bankruptcy proceedings when there are multiple judgment creditors. However, it bears noting that the BA 1967 only confers the bankruptcy court the power to substitute a judgment creditor who does not proceed with due diligence, by virtue of section 95 that read as follows: 18

“Power to change carriage of proceedings Where the petitioner does not proceed with due diligence on his petition, the court may substitute as petitioner any other creditor to whom the debtor is indebted in the amount required by this Act in the case of the petitioning creditor, or may give the carriage of the proceedings to the Director General of Insolvency, and thereafter the proceedings shall, unless the court otherwise orders, be continued as though no change had been made in the conduct of the proceedings.” [31] Materially, the said provision is narrower in scope than the equivalent provision under the English Insolvency Rules 1986, Rules 6.30 and 6.31, which provide as follows: Substitution of petitioner 6.30. (1) This Rule applies where a creditor petitions and is subsequently found not entitled to do so, or where the petitioner-

consents to withdraw his petition or to allow it to be dismissed, or consents to an adjournment, or fails to appear in support of his petition when it is called on in court on the day originally fixed for the hearing, or on a day to which it is adjourned, or 19

appears, but does not apply for an order in the terms of the prayer of his petition.

The court may, on such terms as it thinks just, order that there be substituted as petitioner any creditor who-

has under Rule 6.23 given notice of his intention to appear at the hearing,

is desirous of prosecuting the petition, and

was, at the date on which the petition was presented, in such a position in relation to the debtor as would have enabled him (the creditor) on that date to present a bankruptcy petition in respect of a debt or debts owed to him by the debtor, paragraphs (a) to (d) of section 267(2) being satisfied in respect of that debt or those debts. Change of carriage of petition 6.31. - (1) On the hearing of the petition, any person who claims to be a creditor of the debtor, and who has given notice under Rule 6.23 of his intention to appear at the hearing, may apply to the court for an order giving him carriage of the petition in place of the petitioning creditor, but without requiring any amendment of the petition. 20 [32] It is evident therefore that the scope of our section 95 is limited. It allows a substitution of a petitioner or providing the Director General of Insolvency carriage of the proceedings where a petitioner does not proceed with diligence, which is not applicable to the present case. The case before the High Court was not a case where the petitioner does not proceed with the bankruptcy proceedings with due diligence but a co-petitioner who had received his portion of the judgment sum, wished to cease from being a party to the bankruptcy proceedings. Rule 276 of the 1969 BR [33] We now move on to deal with rule 276 of the 1969 BR. Learned counsel for the appellants argued that Court of Appeal failed to give any or sufficient consideration to rule 276. Learned counsel submitted that even assuming there is a lacunae in the BA 1967 or the 1969 BR, Order 15 rule 6(2)(a) and Order 20 rule 8 of the 2012 Rules apply in this case by virtue of rule 276. [34] This line of argument cannot be right. The key point here is that, as discussed earlier, there is already a specific provision in the BA 1967, section 93(3) to deal with amendments. In Dr Shamsul Bahar bin Abdul Kadir v RHB Bank Bhd & Another [2015] 4 MLJ 1, the Federal Court held that the explicit provisions of an Act 21 of Parliament should not be ignored against a provision of a subsidiary legislation. In the event of conflict between these provisions then the provisions in an Act of Parliament should prevail. The Federal Court in that case explained the effect of rule 276 as follows: “[32] It was urged upon me by counsel for the judgment creditor that I should decline to follow the cases of Re Ide (1886) 17 QBD 755 and Woodall, Re, ex p Woodall (1884) 13 QBD 479 because, in this country, unlike in the UK, we have r 276 of the Bankruptcy Rules 1969 (the BR), which expressly provides that the Rules of the Supreme Court (now the Rules of the High Court 1980) regulating the procedure in its civil jurisdiction shall not apply to any proceedings in bankruptcy. Accordingly, it was submitted that there being no requirement in the BR that leave was required for commencing bankruptcy proceedings founded on a judgment entered more than six years previously no such leave was required. As such, the only bar to the commencement of bankruptcy proceedings would be if and when a judgment creditor is barred by s 6(3) of the Limitation Act 1953, so ran counsel’s submission. I regret I find counsel for the judgment creditor’s submission regarding this part of the case unacceptable. In my opinion, the overriding consideration here is, as I have indicated, the proper interpretation of s 3(1)(i) of our Act. I am not at liberty to brush 22 aside the explicit provisions of s 3(1)(i) merely because of r 276 of the BR. Accordingly, if there is any conflict between these two measures I would regard s 3(1)(i) as having overriding effect since it ranks as principal legislation whereas the BR are subsidiary legislation (see s 23(1) of the Interpretation (States of Malaysia) Act 1967). In my view, therefore, the UK decisions are of direct relevance when construing s 3(1)(g) of our Act and I would respectfully follow them.” [35] Likewise, in our opinion, since there is already a specific framework to address amendment as provided in section 93(3) and for the substitution of party as provided in section 95 of the BA 1967, the relevant provisions of the 2012 Rules are not applicable. We agree with the submissions of learned counsel for the respondent that it is not for the courts to rely on rule 276 of the 1969 BR to extend the scope of the said framework. We do not believe it would be right to extend what is a clear statutory provision to a fact situation not covered by the BA 1967 or the 1969 BR. In our opinion the withdrawal of a judgment creditor as one of several co-petitioners is not within the contemplation of the BA 1967. The High Court does not have the power to make such an order in the exercise of its bankruptcy jurisdiction or to rely on rule 276 in order to widen it to allow for the same. 23 Conclusion [36] In consequence and in view of all the above our answer to the question of law must be answered in the negative. [37] The result is that this appeal fails and must be dismissed with costs. [38] My learned sister, Justice Rohana and my learned brother, Justice Mohd Zawawi have read this majority judgment in draft and have expressed their agreement with it. My learned sister, Justice Alizatul has indicated that she has a dissenting decision. [39] Finally, we wish to state that this judgment is delivered pursuant to section 78 of the Courts of Judicature Act 1954 as our learned brother, Dato’ Sri Balia has retired. Dated this day, 15 May 2019. -sgd- (AZAHAR BIN MOHAMED) Federal Court Judge 24 For the Appellants: Lua Ai Siew and Elyazura binti Md Shaarani Messrs. Soo Thien Ming & Nashrah For the Respondent: Malik Imtiaz Sarwar, Tony Woon Yeow Thong and Chan Wei June Messrs. Woon & Co.