Berkenaan: Mazlan bin Aliman (No. K/P: 660717-01-5909) v Ex-Parte: Lembaga Kemajuan Tanah Persekutuan (29NCC-3770-10/2015)

The judgment debtor, Mazlan Bin Aliman (hereinafter referred to as ‘JD’), filed an appeal to a Judge in Chambers dated 13.9.2016 (hereinafter referred to as ‘encl. 25’) against the decisions of the Senior Assistant Registrar (SAR) in regard to two applications filed by the JD which were dismissed by the SAR.

In the first application (hereinafter referred to as ‘encl. 5’), the JD sought to set aside the Bankruptcy Notice issued by Lembaga Kemajuan Tanah Persekutuan (FELDA) (hereinafter referred to as the ‘JC’).

In the second application (hereinafter referred to as ‘encl. 17’), the JD sought to set aside the Creditor’s Petition filed by the JC.

On 6.9.2016, the SAR dismissed both the JD’s applications and awarded costs of RM500.00 each to the JC. The JD was not satisfied with the decisions of the SAR and filed an appeal to a Judge in Chambers (encl. 25) pursuant to Order 56 of the Rules of Court 2012.

The appeal came before me. On 19.10.2016, I dismissed the JD’s appeal. The JD was not satisfied with the decision and filed an appeal to the Court of Appeal. This Decision serves as the reasons for my decision. The reasons are set down as below.

The JC brought a defamation suit against the JD in a civil suit No. S-21-191-2009. The parties had gone through a full trial. On 29.5.2015, Page 3 of 9 the trial court held in favour of the JC and awarded damages of RM500,000.00 to be paid by the JD to the JC (hereinafter referred to as the ‘judgment’). The JD was not satisfied with the decision of the trial court and has filed an appeal to the Court of Appeal via Civil Appeal No. W-02(NCVC)(W)-1116-07/2015 against the decision of the trial court.

The JD’s appeal (main suit - civil suit No. S-21-191-2009/Civil Appeal No. W-02(NCVC)(W)-1116-07/2015) was still pending at the Court of Appeal when encl. 25 was heard before this Court.

While the main suit was pending appeal at the Court of Appeal, the JD did not satisfy the judgment debt. As such, the JC took out a bankruptcy action against the JD. A Bankruptcy Notice dated 27.10.2015 (hereinafter referred to as the ‘BN’) was issued by the JC against the JD to claim for a sum of RM671,202.74 as at 27.10.2015.

The BN was served on the JD on 15.11.2015. The JD did not satisfy the amount claimed in the BN. Instead, on 10.1.2016, the JD filed encl. 5 to set aside the BN.

On 17.4.2016, the JD also filed encl. 17 to set aside the Creditor’s Petition dated 18.12.2015 (hereinafter referred to as the ‘CP’).

On 6.9.2016, the SAR dismissed both the encls. 5 and 17.

The learned counsel for the JD submitted that the judgment dated 29.5.2015 was not a final judgment. The learned counsel for the JD urged this Court to refer to a High Court decision in Re Udos ak Riging, Page 4 of 9 ex p Seabanc Kredit Sdn Bhd [1994] 3 MLJ 383, wherein the High Court held, inter alia, that a default judgment is not a final judgment because it is not decided on the merits. The High Court also held that ‘any judgment not given on merit is liable to be set aside on application and does not finally dispose of the rights of the parties’.

Upon perusal of the judgment of Abdul Kadir Sulaiman J. (as his Lordship then was), it was observed that the proposition laid down in Re Udos ak Riging could not be applied to the present case. The facts in Re Udos ak Riging were distinguishable from the present case.

In the present case, the parties had gone through a full trial. Evidence was led in the trial, and the trial judge had considered the evidence and the arguments which were put forward by the parties. Hence, the judgment of the trial judge was based on merits as opposed to the facts in Re Udos ak Riging where the judgment obtained therein was a judgment in default. In the present case, the judgment by the trial court is indeed a final judgment as it has finally disposed the rights of the parties.

This Court was of the view that the learned counsel for the JD’s reliance on the case of Re Udos ak Riging to support the application in encl. 5 was misconceived.

The gist of the learned counsel’s argument for the JD was that the filing of the Creditor’s Petition dated 18.12.2015 by the JC was pre-mature.

The learned counsel for the JD submitted that the JD had filed his application (encl. 5) to set aside the BN on 10.1.2016; and the application was only decided and disposed on 6.9.2016 (approximately 9 months later). The learned counsel for the JD also submitted that the JC could file its CP only after the encl.5 has been disposed which was after 6.9.2016. Hence, the filing of the CP was pre-mature, the learned counsel for the JD argued.

The learned counsel for the JD urged this Court to refer to the Supreme Court case of Datuk Lim Kheng Kim v Malayan Banking Bhd [1993] 2 MLJ 298. The learned counsel for the JD referred, in particular, the following passage in the judgment of Mohamed Dzaiddin SCJ (as his Lordship then was) at p. 305, wherein it states as follows: “In passing, we wish to emphasize that, contrary to what had been expressed in Soh Bok Yew, if a bankruptcy petition is to be founded on an act of bankruptcy based on a failure to comply with a bankruptcy notice, it is self-evident that such a petition can only be filed after the application to set aside the bankruptcy notice is heard and dismissed.”

In reply to the submission of the JD’s counsel, the learned counsel for the JC submitted that pursuant to s.5(1)(c) of the Bankruptcy Act 1967, the JC has to file the CP within 6 months from the date the JD committed the act of bankrupt. Section 5(1)(c) of the Bankruptcy Act 1967 states as follows: Page 6 of 9

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

(a)...;and

(b)...; and

the act of bankruptcy on which the petition is grounded has occurred within six months before the presentation of the petition; and

(d).... [20] The act of bankruptcy was committed within 6 months before the CP was filed on 18.12.2015. The BN was served on the JD on 15.11.2015, and the JD had failed to satisfy the judgment debt within seven days after service of the BN, therefore, the JD had committed an act of bankrupt after the seventh day upon receipt of the BN (see s.3(1)(i) of the Bankruptcy Act 1967). In law, the JC was entitled to file the CP pursuant to s.5(1)(c) read together with s.3(1)(i) of the Bankruptcy Act 1967, the learned counsel for the JC argued. [21] The learned counsel for the JC referred this Court to a High Court decision in Re Gan Eng San; ex p HSBC Bank Malaysia Bhd [2011] 3 CLJ 409, wherein Mah Weng Kwai J. (as his Lordship then was) held at p. 416 as follows: “As the act of bankruptcy was committed by the JD on 23 September 2008, the filing of the CP on 12 March 2009 that is, three months before the disposal of the summons in chambers to set aside the BN was heard Page 7 of 9 by the SAR on 23 June 2009 is valid. The CP filed on 12 March 2009 was properly filed within six months from the act of bankruptcy committed on 23 September 2008. In light of the chronology of events, the hearing of the CP on 14 June 2010 and the grant of the AO/RO by the SAR were therefore not premature.” [22] In the present case, the act of bankrupt was committed after the seventh day of the service of the BN on 15.11.2015, and the CP was filed on 18.12.2015. The act of bankruptcy was committed well within 6 months before the CP was filed, in compliance with s. s.5(1)(c) of the Bankruptcy Act 1967. In law, the filing of the CP could not be said as pre-mature(see Re Lee Guan Par; ex-p Hotel Universal Sdn Bhd [2009] 7 MLJ 427). [23] The CP was not heard when encl. 5, i.e. the application to set aside the BN, was dismissed by the SAR on 6.9.2016. Further, the CP was also not heard on 19.10.2016 when this Court dismissed the JD’s appeals to a Judge in Chambers relating to his two applications (encls. and 17). [24] This Court was of the considered view that the filing of encl. would not operate as a stay nor would it prevent the JC from filing the CP. The right of the JC to file the CP is accorded by the law pursuant to s.5(1)(c) of the Bankruptcy Act 1967. There is nothing to prevent the JC from filing the CP pending the disposal of an application to set aside the BN. Page 8 of 9 [25] This Court was also of the considered view that it is prudent practice for the hearing of the CP (during which the Court decides whether to grant RO/AO) to proceed only after the application to set aside the BN has been disposed of. In this instant case, the CP was not heard before the disposal of encl. 5. The right of the JD to challenge the BN was not compromised. The filing of the CP could not be said as pre-mature nor could it be said to have jeopardized the hearing of the application to set aside the BN. [26] Based on the above reasoning, this Court was of the considered view that the JC could file the CP at the time it was filed and it was not pre-mature as argued by the learned counsel for the JD. With greatest respect to the passing remark of the Supreme Court in Datuk Lim Kheng Kim that ‘a petition can only be filed after the application to set aside the bankruptcy notice is heard and dismissed,’ this observation, if it is strictly followed, it would place a JC in a tight spot. On the one hand, the JC has to comply with s.5(1)(c) of the Bankruptcy Act 1967, and on the other hand the hearing or disposal of the application to set aside a BN could take place very much later in time. Conclusion [27] Based on the above reasoning, this Court dismissed the JD’s encl. 5 and 17 in the Notice to Appeal to Judge in Chambers (encl. 25) and awarded costs of RM2,000.00 to be paid by the JD to the JC. -Signed- ……………………………………… (CHOO KAH SING) Judicial Commissioner High Court, Johore Bharu Page 9 of 9 JD’s Counsel : Hassan Karim Tetuan Hassan Karim & Co. JC’s Counsel :