Ber : Hassan Bin Ishak v Ex-Parte : Bank Pembangunan Malaysia Berhad (BA-29NCC-3206-04/2016)

This case involves two appeals from the Judgment Debtor (JD), Enclosure 45 and Enclosure 46, deriving from enclosures 17 and 24 by JD that were dismissed by the learned Senior Assistant Registrar on 16.6.2017.

Enclosure 45 is a Notice of Appeal to Judge in Chamber dated 23.6.2017 by JD against the decision of the learned Senior Assistant Registrar in dismissing JD’s application to strike out the Creditor’s Petition (CP) filed, dated 21.7.2016; and 2

Enclosure 46 is a Notice of Appeal to Judge in Chamber dated 23.6.2017 by JD against the decision of the learned Senior Assistant Registrar in holding JD’s application to expunge and/or to strike out the Affidavit of Truth of Statement in CP affirmed by one Afidah binti Mohd Ghazali on 10.3.2017, to be academic.

This Court holds the view that there is no merit in the JD’s appeals and consequently dismissed the same based on the grounds enumerated below.

The Bankruptcy Notice dated 8.4.2016 filed by the JC was founded on a Judgment in Default (JID) dated 19.3.2012 which was entered against the JD. The JC claimed that the JD failed to comply with the terms in the Bankruptcy Notice within 7 days after receipt, thereby an act of bankruptcy had been committed. Subsequently the JC filed the CP on 21.7.2016 accompanied by Affidavit Verifying Truth of Statement in CP (“1st AFV in CP”) affirmed by Afidah Binti Mohd Ghazali dated 20.7.2016.

The notice of intention to oppose CP and affidavit to oppose the CP by the JD was filed on 16.2.2017 and subsequently the JD filed an application vide Summon In Chambers on 23.2.2018 (“enclosure 17 before the learned Senior Assistant Registrar”) for an order purportedly under Rule 117 of Bankruptcy Rules 1967 and/or Section 6(3) of the Bankruptcy Act 1967 to dismiss and/or strike out the CP.

The JD contended that the bankruptcy proceeding herein is materially defective for the reason that the 1st AFV in CP which was 3 affirmed by Afidah binti Mohd Ghazali on 20.7.2016 was an affidavit affirmed before the CP was issued on 21.7.2016.

Following the objection taken by the JD, the JC sought to rectify the alleged defect by filing a fresh Affidavit Verifying Truth of Statement affirmed by Afidah binti Mohd Ghazali (hereinafter referred as “2nd AFV in CP”) on 10.3.2017. Hence the JD filed an application vide Summon in Chamber (“enclosure 24 before the learned Senior Assistant Registrar”) to expunge and/or strike out the JC’s 2nd AFV in CP.

Both enclosures 17 and 24 were dismissed by the learned Senior Assistant Registrar on 16.6.2017 and the JD being aggrieved by the decision, appealed vide Notice of Appeal to Judge in Chamber under Enclosure 45 and Enclosure 46. JD’s submission Enclosure 45 [10] The learned counsel for the JD advanced several grounds of appeal. Briefly, it is the JD’s counsel’s contention that the JC’s CP failed to follow Form 9 of rule 99 of Bankruptcy Rules 1969 as it did not contained a paragraph 4 of Form 9.

It is submitted as one of the grounds by the JD’s counsel, the averment that the JC’s 1st AFV in CP was affirmed on 20.7.2016 prior to the filing of the CP dated 21.7.2016. The JD’s counsel submitted that the verifying affidavit is materially defective as the CP was not born before the affidavit following the case of Sobri bin Arshad v Associated Tractors Sdn Bhd [1991] 3 MLJ 32. 4

The JD also submitted that even if the JC wish to rectify the material defect by re-swearing and re-filing an affidavit verifying the petition, it must be done within the 6 months that is from the alleged act of bankruptcy, that is from 2.6.2016 until on or before 2.12.2016. It is submitted that the act of bankruptcy allegedly committed by the JD was on 2.6.2016, however the JC’s 2nd AFV in CP was only filed on 10.3.2017.

It is further contended by the JD that the CP is defective for failure to state the correct date of commission of act of bankruptcy. The term of the order of substituted service dated 10.5.2016 states that the service is deemed to be only good after expiry of 7 days from the date of the advertisement and posting of the bankruptcy notice at the last known address of the JD and the court’s notice board.

The CP stated the advertisement of the Bankruptcy Notice was done on 17.5.2016, and the relevant posting at the notice board and the JD’s premise was done on 16.5.2016 and 18.5.2016 respectively. The computation of 7 days should follow from 19.5.2016 and the Bankruptcy Notice must be deemed to have effected on 26.5.2016. It was argued that the relevant period of 7 days for the JD to comply the Bankruptcy Notice should start on 27.5.2016 and JD has until 2.6.2016.

The JD denied owing the sum of RM9,906,907.16 as alleged by the JC in the CP. Enclosure 46 [16] It is submitted that the JD’s application for an order to dismiss and/or to strike out the CP by JC is pursuant to rule 117 of Bankruptcy 5 Rules 1969 and/or section 6(3) of Bankruptcy Act 1967 and/or under inherent jurisdiction of the Court on the basis that the bankruptcy proceedings is materially defective for the reason that the 1st AFV in CP was affirmed on 20.7.2016 before the issuance of the CP on 21.7.2016 and therefore the said affidavit is materially defective and invalid in law.

The counsel for JD relied on the High Court case of Sobri bin Arshad v Associated Tractors Sdn Bhd [2991] 3 MLJ 32 where the fact were, in that bankruptcy proceedings, the creditor’s petition was dated 10 November 1989 but the affidavit verifying the creditor’s petition was affirmed on 9 November 1989, that is one day before the date of creditor’s petition. The High Court in that case held that the flaw in the proceeding vitiates the creditor’s petition and cannot be cured by the discretionary powers of the court under section 131 of Bankruptcy Act 1967. JC’s submission Enclosure 45 [18] The learned counsel for the JC submitted that the JD’s contention that the JC’s CP failed to follow Form 9 under rule 99 of Bankruptcy Rules 1969 is without basis. It is averred that the JC’s affidavit in reply had at paragraph 5.3 stated the evidence where the contents in paragraph 4 of Form 9 are in fact contained in paragraphs 4 and 5 of the CP that is the act of bankruptcy committed by the JD within the six months before the date of the presentation of the CP.

The JC’s counsel averred that if this Court is of the opinion that there is a defect, such defect based on rule 131 of Bankruptcy Rules 6 1969, shall not invalidate the proceedings and can be remedied under rule 274 of Bankruptcy Rules 1969.

In relation to JD’s argument on the timeline to file affidavit verifying the truth, the counsel for JC submitted Rule 106 of Bankruptcy Rules 1969 that it does not provide the time limit of which the JC must comply in filing an affidavit verifying petition. It is further argued that the said rule does not limit the numbers of affidavit verifying petition which can be filed by the JC. It is also contended by the JC’s counsel that the affidavit filed was available at the time the CP was issued, wherein the facts and contents were within deponent’s knowledge, before he swore the affidavit.

On the filing of the JC’s 2nd AFV in CP, the JC refers to the case of Ho Weng Keong, Re [1992] 1 CLJ (Rep) 517, where the court held that an affidavit can be filed at any time and it is the CP that need to be filed within 6 months from the date of commission of act of bankruptcy.

The JC also submitted paragraph 5 of the Bankruptcy Notice (page 3 of JC’s Core Bundle) stated an act of bankruptcy is committed on or after 2.6.2016 upon his failure to comply with the Bankruptcy Notice. It is a clear fact that the CP’s petition was filed within 6 months from the act of bankruptcy, and submitted that whether the act of bankruptcy occurred on 2.6.2016 or 3.6.2016 is irrelevant. The JC referred this Court to the case of Re Liow Fong Mooi, ex p Malayan Banking Berhad [2000] 6 MLJ 146 where the error in stating the date on which the act of bankruptcy took place has an irregularity which did not go to the substance of the complaint in the petition. 7

The JC highlighted to this Court that the Bankruptcy Notice was never challenged by the JD, therefore it follows the act of bankruptcy had already been committed by the JD and pray to this Court for both appeals to be dismissed.

I wish to highlight the laws in reference which are the Bankruptcy Act 1967 and the Bankruptcy Rules 1969, having found the typo errors in both counsels’ written submissions as to the years of the legislation and the subsidiary legislation.

Briefly, based on Section 5 of Bankruptcy Act 1967, the Court can make a person a bankrupt if the condition stated in section 5 Bankruptcy Act 1967 is satisfied. The Court of Appeal in the case of Affin Bank Berhad v Abu Bakar Ismail [2017] 1 LNS 65 had remarked that bankruptcy proceedings are quasi-criminal in nature and strict compliance to the laws must be adhered. However bear in mind, that case must be distinguished from this case as in that case decided by the Court of Appeal, it involves an Adjudication Order and Receiving Order which was recorded against the judgment debtor. In this case, it involves the CP before the learned Registrar.

The heart of the matter is whether the CP dated 21.7.2016 is materially defective as the 1st AFV in CP was affirmed on 20.7.2016. I hereby refer to Rule 106 of Bankruptcy Rules 1969 which reads as follows:- ...(1) A creditor’s petition shall be verified by affidavit. 8

A petitioning creditor who cannot himself verify all the statements contained in his petition shall file an affidavit made by some person who can depose to them.. [27] The wordings of rule 106 are plain and unambiguous. There is nowhere in Bankruptcy Act 1967 and Bankruptcy Rules 1969 that provides for a time limit of which the JC must comply in filing an affidavit to verify. I find support in the case of Ho Weng Keong, Re [1992] 2 CLJ 517 as attributed by the JC’s counsel, where Justice Lamin Mohd Yunus had occasion to say, “...Neither the Bankruptcy Act or Rules specifically state that the affidavit must be affirmed after filing or presentation of the petition. Since the petition and the affidavit were together before the Court, this was not the case of an affidavit supporting an “unborn” petition. ...There is no statutory provision stating any limitation of six months from the act of bankruptcy within which an affidavit verifying the petition. Time is not the essence for the filing of a verifying affidavit.” [28] Accordingly, section 6(3) of Bankruptcy Act 1967 provides the avenue for this Court to dismiss the CP and I do not see that the JD’s grounds warrants this Court to dismiss or strike out the CP. [29] I am convinced to rule that the 1st AFV in CP verifying the petition is regular. It is also of the view that even if it is irregular, it can be curable 9 by re-affirm and re-file another or fresh affidavit verifying the petition, in which case the JC had rightly done so. [30] This issue is supported in the case of Ho Weng Keong (supra) where it was held that the first affidavit is found to be good in law and even if it fails, the second affidavit serves to rectify the error made by the first affidavit. This principle was affirmed in the case of Delta Drive (M) Sdn Bhd v Hong Leong Finance Bhd [2008] 4 MLJ 400 by the Court of Appeal as attributed by the JC’s counsel. [31] The Court of Appeal in the Delta Drive (supra) held affirming the learned Judicial Commissioner’s decision in dismissing the preliminary objection by the appellant’s solicitor counsel, namely, there was non-compliance with rule 26 of Companies (Winding-Up) Rules 1972 on the part of the respondent. The Court of Appeal held as follows:- “The learned Judicial Commissioner then ordered that the respondent be allowed to reaffirm or re-swear the affidavit verifying the petition within 10 days with costs to be paid by the respondent. We noted that the appellant did not appeal against this order of the court. Be that as it may, we are of the view that the learned Judicial Commissioner was correct in making that order. Re Mohd Sharid bin Sapie and Sari Atlanti referred to the above would lend support to that order” [32] This court also relies on Section 5 of Bankruptcy Act 1967 and finds that there is no substantial injustice to allow the 1st AFV in CP and the 2nd AFV in CP of the JC following Section 131 of Bankruptcy Act 1967. 10 [33] In relation to the ground that the date of an act of bankruptcy allegedly committed was wrongly stated in the CP and therefore the CP is defective, this Court viewed that the act of bankruptcy is not disputed as to have occurred for 6 months and more when the JD failed to comply with the Bankruptcy Notice within the time frame of 7 days. Upon careful perusal, the last date of posting of the Bankruptcy Notice was on 18.5.2016, hence the computation of 7 days will commence on 19.5.2017 and ends on 25.5.2017. The bankruptcy notice is deemed to be served on 25.5.2017. This Court finds that the 7 days’ time frame to comply with the Bankruptcy Notice will begin on 26.5.2016 and ends on 1.6.2016 and therefore the commission of an act of bankruptcy falls on 2.6.2018, as correctly stated in the CP. [34] It is pertinent to highlight that the Court of Appeal’s decision in the case of Stephen Wong Leong Kiong v HSBC Bank Malaysia Bhd [2009] 6 CLJ 466 submitted by the JD in reliance that misstatement of the date of act of bankruptcy was fatal was overruled by the Federal Court vide Civil Appeal No: 03-1 of 2006(N) and the order of High Court, Seremban dated 21.2.2005 was affirmed and the receiving and adjudication orders both dated 10.3.2005 issued against the respondent were reinstated. [35] Hence, even if it is averred by the JD that the date of act of bankruptcy is wrong, it is an irregularity only which is remediable under section 131 of Bankruptcy Act 1967 as no substantial injustice was caused to the JD. 11 [36] In light of the 1st AFV in CP is good in law, it follows that Enclosure 46 is rendered academic. I dismissed both Enclosure 45 and Enclosure 46 with costs at RM5,000.00. Dated: 12 April 2018 (ZALITA BINTI DATO’ ZAIDAN) Judicial Commissioner Shah Alam High Court 12 COUNSEL FOR THE JUDGMENT DEBTOR: N. RAJENTHARAN GH Tee & Co. No 22A-3, Jalan PJU 8/3A, Perdana Business Center, Bandar Damansara Perdana, 47820 Petaling Jaya, Selangor Darul Ehsan [Ref: 0422016.LTG/RAJ.HBI] Tel: 03-7726 4831 Fax: 03-7726 5251 COUNSEL FOR THE JUDGMENT CREDITOR: VERONICA DOMINIC Prasad Abraham & Associates 8-7-3, Menara Mutiara Bangsar, Jalan Liku Off Jalan Riong, Bangsar 59100 Kuala Lumpur [Ref: PAA 1093/11) Tel: 03-2284 4955 / 5955 / 6955 Fax: 03-2284 7955