Preamble
Pursuant to the judgment, the judgment creditor filed a bankruptcy proceedings against the judgment debtor vide Bankruptcy No. 29-1092-07/2013 (“the first BN”). The first BN was set aside by this Court on 6.8.2015. There was no appeal by the judgment creditor against the order of this Court setting aside the first BN. Civil Appeal No. N-03(IM)(NCC)-45-06/2017 3 Proceedings in the High Court [5] On 6.9.2016, the judgment creditor issued the second BN which was served on the judgment debtor on 23.11.2016. On 29.11.2016, the judgment debtor filed an application under rule 95 of the Bankruptcy Rules 1969 (“the Bankruptcy Rules”) to set aside the second BN on the grounds that the second BN is caught by the doctrine of res judicata; that the value of the three (3) pieces of land charged to the judgment creditor as security for the loan exceeds the debt or is sufficient to set-off the debt of the judgment debtor; and that the application is not prejudicial to the judgment creditor. [6] The judgment debtor’s application to set aside the second BN came up before the learned SAR on 22.12.2006 where the learned SAR directed the judgment creditor to file affidavit in reply on or before 29.12.2016. Pursuant to the direction, the judgment creditor filed its affidavit in reply on 27.12.2016. [7] On 29.12.2016, the judgment debtor filed a notice of appeal (encl. 12) to the judge in chambers against the decision of the SAR allowing the judgment creditor to file affidavit in reply. The judgment debtor contended that the decision of the SAR was in breach of rule 22 of the Bankruptcy Rules which reads: “Where any party intends to use affidavits in opposition to an application he shall deliver copies of them to every party affected thereby not less than three clear days before the day appointed for the hearing.”. Civil Appeal No. N-03(IM)(NCC)-45-06/2017 4 [8] On 26.1.2017, the learned SAR dismissed the judgment debtor’s application to set aside the second BN. Aggrieved, the judgment debtor appealed to the judge in chambers (encl. 13). [9] The learned JC heard the judgment debtor’s appeals in encl. 12 and enc. 13 together where her Ladyship allowed both the appeals. In respect of the appeal against the decision of the learned SAR allowing the judgment creditor to file the affidavit in reply, the learned JC held that rule 22 of the Bankruptcy Rules must be strictly observed and since the judgment creditor did not file any application for extension of time to file affidavit in reply, there were no reasons given for the delay in filing the affidavit in reply. Without any reason, the SAR could not exercise her discretion arbitrarily. As for the appeal on the setting aside of the second BN, the learned JC agreed with the judgment debtor that as the first BN has been set aside, the judgment creditor is estopped from filing the second BN on ground of res judicata. [10] Dissatisfied with the learned JC’s decision, the judgment creditor appealed to this Court. The Appeal [11] Before us, on the setting aside of the second BN, learned counsel for the judgment creditor submitted that the learned JC erred in her finding on res judicata as the doctrine of res judicata is not applicable to bankruptcy proceedings. In support of his submission, learned counsel cited Malayan Banking Bhd v Datuk Lim Kheng Khim [1992] 2 MLRH 149; Datuk Lim Kheng Civil Appeal No. N-03(IM)(NCC)-45-06/2017 5 Khim v Malayan Banking Bhd [1993] 1 MLRA; Re Khondker Yarad Ahmed [2016] MLRHU 1; and Re Victoria (1854) 2 QB 387. [12] In respect of the affidavit in reply, learned counsel submitted that the judgment debtor’s appeal against the decision of the learned SAR was premised on the assumption that the date stated in the Summons in Chambers (“the SIC”) is a hearing date. That was not however the case as with the introduction of the case management system, the date endorsed in the SIC is not a hearing date but a case management date. [13] In response, on the issue of affidavit in reply, learned counsel for the judgment debtor submitted that the judgment’s debtor application to set aside the second BN was fixed for hearing on 22.12.2016 and until that date, the judgment creditor did not file any affidavit in reply. According to learned counsel, since there was no affidavit in reply, the judgment debtor sought for an order that the second BN be set aside. The learned SAR however decided to extend time to allow the judgment creditor to file affidavit in reply on or before 29.12.2016. [14] It was further submitted for the judgment debtor that case management provided for under the Rules of Court 2012 (“the ROC 2012”) is not applicable to bankruptcy proceedings. Hence, under rule 22 of the Bankruptcy Rules, the judgment creditor must file its affidavit in reply three (3) days before the hearing date of 22.12.2016. The learned SAR, according to the judgment debtor, had no discretion to extend time. The judgment debtor relied on inter alia, Matthias Chang Wen Chieh v American Express (Malaysia) Sdn Bhd [2012] 2 MLJU 214; Azman bin Jufri v Medtronic Australasia Pty Ltd [2015] MLJU 270; Rohani @ Civil Appeal No. N-03(IM)(NCC)-45-06/2017 6 Hamidah bt Nor v Sincere Leasing Sdn Bhd [1993] 1 AMR 225; and Chua Muk Kwee, Re: Ex-parte UMBC Finance Berhad [1994] 1 AMR 17. [15] On setting aside of the second BN, learned counsel for the judgment debtor reiterated his position in the High Court that the second BN was barred by res judicata. The following cases were cited in support of his argument: Asia Commercial Finance (M) Bhd v Kawal Teliti Sdn Bhd [1995] 3 MLJ 189; Huawei Tech Investment Co Ltd v Transition Systems (M) Sdn Bhd [2013] 5 MLJ 396. It was further submitted, in the alternative, that even if res judicata is not applicable, the filing of the second BN was an abuse of process of court. Our Findings [16] As regards the affidavit in reply, the learned JC found that the application of the judgment debtor to set aside the second BN was fixed for hearing on 22.12.2016 and since the judgment creditor failed to file its affidavit in reply in accordance with rule 22, the judgment debtor’s appeal in encl. 12 ought to be allowed. [17] As set out above, under rule 22 of the Bankruptcy Rules, the judgment creditor has to file the affidavit in reply three days before the hearing of the judgment debtor’s application to set aside the second BN. Thus, the question which arises: when was the hearing of the application to set aside the second BN? The judgment debtor contended that it was on 22.12.2016 as the ROC 2012 under which case managements are conducted, is not applicable to bankruptcy matters. Learned counsel for the judgment debtor cited Order 1 rule 2(2) of the ROC 2012 which reads: Civil Appeal No. N-03(IM)(NCC)-45-06/2017 7 “These Rules do not have effect in relation to proceedings in respect of which rules have been or may be made under any written law for the specific purpose of such proceedings or in relation to any criminal proceedings.”. [18] We accepted that there is no provision in the Bankruptcy Rules on case management. Nevertheless, we found nothing in the Bankruptcy Rules which prevents the court from managing the bankruptcy cases like all other cases. It is common knowledge that for a more efficient and speedy disposal of the cases, it has been the practice of the court to case manage all cases first, before the actual hearing takes place. We noted that in the event of lacunae, the Bankruptcy Rules in fact allows for the application of the Rules of Court 2012. Rule 276 of the Bankruptcy Rules states: “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.”. [19] We were therefore unable to agree with the judgment debtor that the first date endorsed on the judgment debtor’s SIC i.e. 22.12.2016 was a hearing date. In accordance with established practice, that was a case management date. In the circumstances, the filing of the affidavit in reply by the judgment creditor on 27.12.2016 for the hearing on 26.1.2017 of the judgment debtor’s application to set aside the second BN was perfectly in order. It was not in breach of rule 22 of the Bankruptcy Rules. The purported granting of extension of time by the SAR to the judgment creditor to file the affidavit in reply did not arise. [20] On res judicata, we found that the doctrine is not applicable in the instant case. We were not convinced that the cases relied upon by the judgment creditor to support the argument that res judicata does not apply, were wrongly Civil Appeal No. N-03(IM)(NCC)-45-06/2017 8 decided. In Malayan Banking Bhd v Datuk Lim Kheng Khim (supra), Abdul Hamid Mohamed JC (later CJ), said: “Learned Counsel for the judgment debtor argued that the petitioning creditor was estopped from commencing the present bankruptcy proceeding against the judgment creditor (sic) because earlier on a receiving order and adjudication order had been made by the High Court but set aside by the Supreme Court. However, he conceded that the order of the High Court was set aside on the sole ground that the bankruptcy notice was defective since the amount of interests were not quantified. He cited the following authorities: … Clearly these authorities are not on point as none of them is a bankruptcy case. I asked the learned Counsel if he could show me an authority which supported his contention. He admitted he could not. I am of the view that the decision of the Supreme Court on the earlier order made by Dzaiddin J in the earlier proceeding, on the ground that it (the Supreme Court) did, does not operate as res judicata against the petitioning creditor from issuing a fresh bankruptcy notice. The matter is res judicata as regards the earlier notice, not a fresh notice – see In Re Victoria Ex-parte Victoria [1894] 2 QB