Ambank (M) Berhad (dahulu dikenali sebagai AmFinance Berhad v Liew Suat Ngoh (WA-29PB-13-01/2023)

High Court of Malaysia24 Mar 2023

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1 IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR (COMMERCIAL DIVISION) POST BANKRUPTCY NO.: WA-29PB-13-01/2023 BANKRUPTCY NO.: D5-29-1810-2004 BETWEEN AMBANK (M) BERHAD (previously known as AmFinance Berhad [8515-D]) …. JUDGMENT CREDITOR AND LIEW SUAT NGOH (NO. K/P: 4760648) …. JUDGMENT DEBTOR JUDGMENT OF THE COURT Introduction [1] The Judgment Debtor (in this application will be referred to as Bankrupt) filed an application of discharge by way of Summons in Chambers in Encl. 1 on 6.1.2023. [2] Previously on 29.7.2022, the Bankrupt filed similar application before this Court in WA-29PB-758-07/2022. During the first case management, the Director General of Insolvency (“DGI”) informed that ROAO was recorded twice against the Bankrupt. The ROAO recorded against Bankrupt by Am Bank Berhad was on 14.11.2007. Meanwhile, another ROAO recorded earlier against the Bankrupt on 8.5.2006 by petition presented from Maybank Berhad. The Bankrupt had also filed another similar application for discharge in the case of Maybank Berhad. These two applications were heard together before this Court. [3] The DGI informed parties that there was absence of file for the ROAO recorded in Am Bank’s case and there was no administration initiated against the ROAO. Hence, the learned Senior Assistant Registrar directed the Bankrupt to withdraw the case and refile after DGI initiates administration for the Ambank’s case. [4] Hence, the Bankrupt refile the case before this Court. The Court has directed the parties to exhaust all affidavits and written submission and decision was fixed on 24.3.2023. Issues [5] The Bankrupt alleged that she has been adjudged bankrupt due to her position as a Guarantor for Gentali (Malaysia) Sdn Bhd and as a result of the company failed to pay the credit facilities given by the JC. [6] Bankrupt averred that she has not brought on or contributed to her bankruptcy by rash and hazardous speculations or extravagance in living, or by recklessness, or gambling or want of reasonable care and attention to his business and affairs. [7] Bankrupt is already 67 years old and not receiving any income. [8] Adjudged as bankrupt for 14 years and hence second opportunity shall be given for the Bankrupt to start normal life for the remaining years of her life. Analaysis and Findings [9] This Court has scrutinized the previous case managements and hearings and found that this bankruptcy proceeding has started since February 2023; [10] First and foremost, in dealing with Discharge Application filed under section 33 of the Insolvency Act 1967, the most important aspect to consider is the report filed by DGI. [11] The report filed by the DGI must contain facts regarding the Bankrupt’s conduct and affairs. Referring to section 33(3) of the Insolvency Act 1967, the provision stated as follows: - “(3) On the hearing of the application the court shall take into consideration a report of the Director General of Insolvency as to the bankrupt’s conduct and affairs, including a report as to the bankrupt’s conduct during the proceedings under his bankruptcy, and may either grant or refuse an absolute order of discharge, or suspend the operation order of discharge subject to any conditions with respect to any earnings or income which may afterwards become due to the bankrupt, or with respect to his after-acquired property.” [12] After careful consideration towards the report filed by DGI and affidavit by the Judgment Creditor, this Court finds that Bankrupt has not signed any consent form to pay monthly instalment. The first creditors/ meeting was only conducted on 14.11.2022 without any resolution being approved. [13] The JC has filed a POD amounting RM 768,739.49 against the Bankrupt but has been rejected by the DGI via a notice dated 15.11.2022. It is pertinent to note here that DGI has not provide any reason on why the POD was rejected in the report. On top of that, the credit balance in the estate is only RM 1,682.90. As a result, DGI has not been able to declare any dividend against the JC due to the small amount of credit balance. This Court refers to paragraph 26, Schedule C of the Act which stated as follows:- “26. The Director General of Insolvency shall examine every proof and the grounds of the debt, and in writing admit or reject it in whole or in part or require further evidence in support of it. If he rejects a proof he shall state in writing to the creditor the grounds of the rejection.” It is clear that the DGI failed to provide justification to the Court on the rejection of proof of debt in the report that has been tendered and the above schedule has not been complied with. [14] The Court finds that the administration of this case has not been initiated by the DGI since the ROAO was recorded and hence, not a single cent has been paid to the JC. The omission made by DGI to administer this case has brought unfairness and prejudice against the JC. It is extremely important for this Court to consider the consequences of discharging a Bankrupt without any payment made against the JC. [15] This Court is of the knowledge that the credit balance in the estate is insufficient for the DGI to declare any dividend. In addition, this Court is of the view that the report tendered by DGI is not comprehensive in nature. The report does not touch on any engagement by Bankrupt in business or any transaction, management and disposal of any undeclared assets, and financial status of the Bankrupt’s children and spouse. With due respect, this Court would like to adopt Ian HC Chin J (as he then was) dicta in Re Lau Kah Lay & Tang Kuoing Tiew; ExP Cold Storage (Malaysia) Bhd [2001] 3 CLJ 960 who said that:- “The Official Assignee carries the onerous task of ensuring that a bankrupt has no hidden assets stashed away whether in his name of in the name of his wife or children as otherwise people will be imbued with the message that money borrowed can be stashed away and need not be repaid and such horde can be enjoyed even when one is a bankrupt. If the office of the Official Assignee does not show itself equal to the task of preventing such rip-off the creditor, then cases of borrowers not repaying and not minding to be made bankrupt will be the rule rather than the exception. Then the business morality will decline.” [16] In other words, there is not enough investigation made by the DGI against the Bankrupt and her assets. How would enough investigation be made if there was no administration conducted towards this case? Administration was only conducted by DGI after the Bankrupt withdrew her previous application before the learned SAR. [17] This Court is of the view that the report tendered by DGI is very important to assist the decision of the Court as it is the prima facie evidence. Referring to sub section (8) of the same section which provides as follows: - “(8) For the purposes of this section the report of the Director General of Insolvency shall be prima facie evidence of the statements therein contained.” The Court of Appeal in the case of Lim Tee Keong v. HLG Securities Sdn Bhd [2017] 3 MLRA explained that:- “[6] In exercising the discretion, the court which hears the application for discharge must take into consideration a report of the DGI as to the bankrupt’s conduct and affairs, including a report as to the bankrupt’s conduct during the proceedings under his bankruptcy. [7] In Lim Hun Swee v. Malaysia British Assurance Bhd & Ors And Other Appeals [2010] 2 MLRA 392, Ramly Ali JCA (as he then was, and now a Federal Court judge) speaking of for this court held, at p 394, that consideration of the DGI report by the court hearing an application for discharge from bankruptcy is a mandatory requirement and the most important consideration. However, the court is not bound to accept the report if the court is satisfied that the report is incomplete and unreliable or made based on incomplete investigation into the conduct and affairs of the bankrupt. The learned judge further said that: “Without a proper or complete report by the DGI, the court cannot decide on the issue of discharge. The purpose of the DGI report is to secure a full and complete investigation and disclosure of all material facts or informations relating to the bankruptcy particularly on issues stipulated under s 33(4) and (6) of the Act. The report is not only for the interest of the bankrupt and the creditors but also the interest of the public as well as the business community at large.” The Court of Appeal also recorded the submission by the counsel for creditors as follows:- “[14] Ambank (M) Berhad, one of the creditors that appeared before us to oppose this appeal, submitted through its counsel that the discharged should not be allowed because the DGI report is incomplete. The report never disclosed or address the fact the bankrupt filed its statement of affairs (on 9 June 2013) almost four months too late. The statement of affairs was supposed to be filed within 21 days from the date of Receiving Order. The RO was made on 18 February 2003. There was no evidence of approval by the DGI for filing of the statement of affairs beyond the 21 days as required under s 16(2)(b) of the Act. The learned counsel also submitted that the non compliance with the requirement of s 16(2)(b) was never addressed by the DGI in his report. Instead the report merely states that the bankrupt did not commit any offence under the Act. There was also no explanation from the bankrupt for the delay and non-compliance. [15] Further, it was submitted for Ambank (M) Berhad that the DGI report has failed to show that the DGI had undertaken a comprehensive and through investigation on the assets of the bankrupt. It was submitted that on the authority of Re Lau Kah Lay & Tang Kuong Tiew; Ex P Cold Storage (Malaysia) Bhd [2001] 1 MLRH 778, the DGI has the onerous task of ensuring that a Lim Tee Keong v. HLG Securities Sdn Bhd [2017] 3 MLRA 137 bankrupt does not attempt to hide or stashed away assets either in his name or the name of his wife and children with the intention to keep the assets out of reach of the creditors. In the instant case, the DGI report only shows that the DGI had written only to the Municipal Council of Petaling Jaya to trace the assets of the bankrupt. It was submitted this effort was not enough. The bankrupt is the eldest son of the late Tan Sri Lim Goh Tong, the founder of the Genting Highland Casino; and all the bankrupt’s sons are quite successful in their business which is evidence by a report in the “Edge” dated 10 October 2012. The Court of Appeal agreed with submission of the learned counsel for creditors and responded as follows:- “[16] We agree with the learned counsel for the supporting creditor AmBank (M) Bhd that the DGI could have and in fact should have undertaken a more thorough investigation into the assets of the bankrupt; especially assets which the bankrupt owned in his name say within five years before the date of RO was pronounced. This would enable the DGI to make more realistic assessment of the bankrupt's financial situation. The need for this to be done in this case is more pressing. In our view, if the bankrupt can run himself into a debt of more than RM100 million by speculating or playing the stock market surely he would need some solid security to secure the credit line that the creditors had extended to him. In this respect, we agree with the learned counsel when he submitted that the DGI report ‘should have gone further by highlighting ALL properties which had been previously owned by the bankrupt and the current owners of the property now (if any). The report should also highlight whether the current owners are in a close relationship with the bankrupt and whether there are evidences showing that the current owners are holding the properties as nominees for the bankrupt’. The DGI had failed to address all these issues in the report. [18] The learned counsel also complained that the DGI report merely states that the bankrupt was working and earning RM7,000.00 a month as Project Co-ordinator with a company called Vertica Resources Sdn Bhd. However, the report did not say whether the bankrupt had other sources of income or gave any particulars about the company Vertical Resources Sdn Bhd like who owns it and who are the shareholders. Is it a family company? [20] The learned counsel submitted that all these were not adequately addressed in the DGI report. Other criticisms of the DGI report by Dato’ Tan are listed as follows: “(a) The said Report failed to certify why the Bankrupt’s friend was willing to propose an offer to settle the Bankrupt’s debt for and on behalf of the Bankrupt.

The said Report also failed to certify the value of asset of the Bankrupt's wife and three children and how did his family obtained such a luxury life.

The total monthly expenses of the Bankrupt was not stated.

It also does not state whether the Bankrupt had any other source of income besides his present income.

The Bankrupt’s assets either in his name and/or in his nominee name failed to be reported in the said Report.

The said Report does not state the true/actual financial standing of the Bankrupt.

The Insolvency Officer (OA) has failed to submit a complete report under s 31(1) of the Bankruptcy Act 1967.

OA has failed to state in the said Report whether the Bankrupt has any other assets not disclosed by him, assets that have been hidden or whether it is under the name of the Bankrupt’s wife, children or nominee.” Hence, it is clear that the report produced by DGI has failed to address all the critics as elaborated in the Lim Tee Keong. [18] The next question for determination therefore is whether the failure of Bankrupt to file her Statement of Affairs in 21 days from the date of ROAO has made her committed an offence under the sub section although there was absence of charge or action by the DGI? Did the Bankrupt committed an offence under section 33(4) of the Insolvency Act 1967? It is imperative for the Court to determine if there have been any offences or any facts mentioned in subsection (4) and (6) of section 33 by the Bankrupt. The sub sections provided as follows:- “(4) In all cases where it is proved to the satisfaction of the court that the bankrupt has committed any offence under this Act or under any written law repealed by this Act or under section 421, 422, 423 or 424 of the Penal Code [Act 574] the court shall unless for special reasons it otherwise determines either refuse the discharge or suspend the operation of the order until a dividend of not less than fifty per centum has been paid to the creditors, and on proof of any of the facts mentioned in subsection (6) the court shall either—

refuse the order; or

suspend the operation of the order for a specified time; or

suspend the operation of the order until a dividend of not less than fifty per centum has been paid to the creditors; or

grant an order of discharge subject to such conditions as aforesaid. The powers of suspending and attaching conditions to a bankrupt’s discharge may be exercised concurrently. ….

The facts hereinbefore referred to are—

that the bankrupt has omitted to keep such books of account as sufficiently disclose his business transactions and financial position within the three years immediately preceding his bankruptcy, or within such shorter period immediately preceding that event as the court deems reasonable in the circumstances;

that the bankrupt has continued to trade after knowing or having reason to believe himself to be insolvent;

that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable ground of expectation, proof whereof shall lie on him, of being able to pay it;

that the bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet his liabilities;

that the bankrupt has brought on or contributed to his bankruptcy by rash and hazardous speculations or extravagance in living, or by recklessness, or gambling or want of reasonable care and attention to his business and affairs;

that the bankrupt has delayed or put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action or other legal proceedings properly brought or instituted against him;

that the bankrupt has brought on or contributed to his bankruptcy by incurring unjustifiable expense in bringing any frivolous or vexatious action;

that the bankrupt has within three months preceding the date of the bankruptcy order, when unable to pay his debts as they become due, given an undue preference to any of his creditors;

that the bankrupt has within three months preceding the date of the bankruptcy order incurred liabilities with a view to making his assets equal to an amount of fifty ringgit per centum of the amount of his unsecured liabilities;

that the bankrupt has in Malaysia or elsewhere on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors;

that the bankrupt has been guilty of any fraud or fraudulent breach of trust;

that the bankrupt has within three months immediately preceding the date of the bankruptcy order sent goods out of Malaysia under circumstances which afford reasonable grounds for believing that the transaction was not a bona fide commercial transaction;

that the bankrupt’s assets are not of a value equal to fifty ringgit per centum of the amount of his unsecured liabilities, unless he satisfies the court that the fact that the assets are not of a value equal to fifty ringgit per centum of his unsecured liabilities has arisen from circumstances for or in respect of which he cannot justly be held blameable.” [19] Referring to the same case of above in Lim Tee Keong v. HLG Securities Sdn Bhd [2017] 3 MLRA, the Court of Appeal elaborated as follows:- “[6] More importantly is the provision of s 33(4) of the Act where it provides that in all cases where it is proved to the satisfaction of the court that the bankrupt has committed an offence under the Act or under any written law repealed by the Act or under ss 421, 422, 423 or 424 of the Penal Code, the court shall, unless for special reasons it otherwise determines either refuse the discharge or suspend the operation of the order until a dividend of not less than 50% has been paid to the creditors. [20] This Court is of the view that although the Bankrupt has never been tried for any bankruptcy offence, the failure of Bankrupt to file her Statement of Affairs in 21 days from the date of ROAO is amounting to a contempt of court as provided in section 16(3) of the Act. It must be noted that a contempt of court is also a punishable offence. Since the Court is satisfied that the Bankrupt has committed an offence under the Act, the Court shall refuse the discharge application as highlighted by the Court of Appeal in Lim Tee Keong. In that case, the Court of Appeal was aware of the absence of any charge against the Bankrupt although the Statement of Affairs has been filed not within 21 days from date of ROAO. However, the Court of Appeal affirmed the learned High Court Judge’s findings that the Bankrupt has committed a contempt of court. The Court of Appeal said as follows:- “[23] The learned judge had ordered that the bankrupt came up with 55% dividend because the bankrupt had ‘committed an offence’ under the Act for failing to file his statement of affairs within 21 days after the RO was ordered as required under s 16(3). [24] We notice that the requirement under that section is mandatory. Therefore, a non-compliance would mean a breach of statutory provision. Therefore, we say the learned judge was correct to equate it with an offence. It must be noted that a contempt of court is also a punishable offence.” [21] Based on the aforesaid reasons, and after careful scrutiny and judicious consideration of the affidavits and written submissions of the parties in respect of the SIC, this Court ordered as follows:

dismiss the Discharge Application with cost of RM 1,000 subject to allocator fee. Dated: 1.6.2023 t.t (MUHAMMAD FAISAL BIN ZULKIFLI) Senior Assistant Registrar High Court of Malaya Kuala Lumpur Counsel/Solicitors For the Judgment Creditor: Toh Xin Yi, Messrs Shahrizat Rashid & Lee. For the Bankrupt: Ong Ing Siew, Messrs Ooi & Ooi. For the Director General of Insolvency: Nur Hazrin binti Arshad.

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Case metadata

Court: High Court of Malaysia
Decision date: 24 Mar 2023
Case number: WA-29PB-13-01/2023
Coram: Tuan Muhammad Faisal bin Zulkifli
Practice area: Discharge — Discretion of court, how exercised — Report of Director General of Insolvency (DGI) — DGI’s reports making no reference to the bankrupt’s failure to comply with s 16(2)(b) Bankruptcy Act-Whether Bankrupt committed an offence under section 16(3) off the Act even in absence of prosecution from KPI—DGI’s reports making no reference to bankrupt’s earning capability - DGI’s reports incomplete — Balance between public interest and commercial morality
Version: Alasan Penghakiman 1
Published: 9 Jun 2023
Source ID: 790c6cb0-91dd-4cc2-b228-0b90bca084c4

Catchwords

Discharge — Discretion of court, how exercised — Report of Director General of Insolvency (DGI) — DGI’s reports making no reference to the bankrupt’s failure to comply with s 16(2)(b) Bankruptcy Act-Whether Bankrupt committed an offence under section 16(3) off the Act even in absence of prosecution from KPI—DGI’s reports making no reference to bankrupt’s earning capability - DGI’s reports incomplete — Balance between public interest and commercial morality

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Ambank (M) Berhad (dahulu dikenali sebagai AmFinance Berhad - pemiutang-penghakiman - ejudgment_parties
Liew Suat Ngoh - penghutang-penghakiman - ejudgment_parties
KETUA PENGARAH JABATAN INSOLVENSI MALAYSIA - pihak-terkilan - ejudgment_parties

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Ambank (M) Berhad (dahulu dikenali sebagai AmFinance Berhad v Liew Suat Ngoh (WA-29PB-13-01/2023)

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Ambank (M) Berhad (dahulu dikenali sebagai AmFinance Berhad v Liew Suat Ngoh (WA-29PB-13-01/2023)

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