Izhar Bin Che Mee & 1 Lg v Public Bank Berhad (D-22NCC-945-2010)

IZHAR BIN CHE MEE (No. K/P: 620422-10-6479/6775092)

NOORAZLIN BINTI SA’AT (No. K/P: 620707-01-5212/6789154) … DEFENDANTS

This is an application by the Plaintiff Public Bank Berhad for an order under Order 26 r. 4 and Order 92 r 4 of the Rules of Court 2012 that the Plaintiff be granted leave to commence execution proceedings against the Defendant based on the judgment in default dated 29.7.2010 where more than 6 years have lapsed. I have dismissed the application. These are the full reasons for my decision. 2

The Defendants are guarantors for a facility granted by the Plaintiff to the borrower Millionaire Kids Sdn Bhd which was wound up on 1.6.2015.

The Plaintiff commenced legal action against the Defendants and obtained a judgment in default on 29.7.2010.

The 6 years wherein the Plaintiff can execute the judgment without leave of the Court expired on 29.7.2016 but the Plaintiff did not execute the judgment against the Defendants.

5.

Several public auctions were conducted to auction off the said properties on 24.6.2010 and 19.8.2010 but there was no bidder that was interested in the said properties. 3

On 21.9.2010, on the request of the borrower, the Plaintiff agreed to grant “Repayment Arrangement of Fixed Loan” to the borrower. As a result, the Plaintiff had cancelled the auction which was fixed on 23.9.2010.

However, the Defendants have breached the conditions or terms of the Repayment Arrangement of Fixed Loan and the Defendants had failed to make the requisite repayments to the Plaintiff.

As a result, the Plaintiff resumed the foreclosure proceedings against the properties that were assigned to the Plaintiff. A few public auctions were held to auction off the properties on 24.11.2011 and 29.11.2011. Again there was no interested bidder.

Finally a public auction was held on 18.1.2012 and the above properties were successfully auctioned off at a purchase price of

The net proceeds of the auction after deduction of costs/fees were not enough to settle the judgment debt and as at 14.3.2018 the outstanding balance of debts still owing is RM1,534,918.86. 4

As the 6 years for the Plaintiff to execute the judgment without leave has expired on 29.7.2016, the application herein was filed.

There is no doubt that the Court has the discretion to grant the leave applied for in favour of the Plaintiff. However, the court in Duer v Frazer [2001] 1 ALL E R 249 held that unless it was ‘demonstrably just to do so’, leave to extend time beyond the 6 year period would not be granted. The onus is upon the judgment creditor to establish this requirement to the satisfaction of the court. The criteria for this purpose included all the circumstances of the case including the period of the delay, the reasons for the delay and the extent of prejudice (if any) suffered by the judgment debtor as a result of the delay.

In Wembley Industries Holdings Bhd v RHB Bank Bhd [2012] 1 LNS 505, the Court of Appeal held that: “[7] The granting of leave in respect of an application under O. 46 r. 2 of the rules is in the court’s discretion. It is incumbent upon such an application to furnish the court sufficient reasons as to why the court should exercise the discretion in the applicant’s favour.” 5

The Defendants have relied on the case of Affin Bank Berhad v Wan Abdul Rahman Bin Wan Ibrahim [2003] 1 CLJ 826 where the High Court had placed importance on the applicant furnishing a reasonable explanation to support their application for leave to execute the judgment after the expiry of 6 years. This is what the Court said: “It is trite that the grant of leave under O. 46 r. 2 is in the court’s discretion. Order 46 r. 3 states that an application under O. 46 r. 2(1) must be supported by an affidavit stating, when the case falls within r. 2(1)(a), the reasons for the delay in enforcing the judgment or order. Therefore, it is incumbent upon the applicant to furnish the court with sufficient reason in support of such an application. What is sufficient reason? This naturally will vary from case to case. It is not possible for this court to provide an exhaustive list of what is considered to be sufficient reason. By way of illustration, in Tio Chee Hing v ChungKhiaw Bank Ltd [1982] CLJ 352 (Rep); [1982] CLJ 23; [1981] 1 MLJ 227 the reasons given for the delay was that there were negotiations for settlement by arrangement. The High Court there accepted that as being sufficient reason and the Federal Court agreed with the trial judge. In Public Bank Bhd v Seato Trading (M) Sdn Bhd & Ors [1995] 1 LNS 326; [1996] 1 MLJ 165 Zakaria Yatim J (as he then was) stated that: It was proper for the plaintiff not to issue execution when the third defendant was making payments. 6 However, the fact that the application was made within the 12-year period as prescribed by s 6(3) of the Limitation Act 1953 for the bringing of an action upon a judgment is not a sufficient ground for granting of leave as the right to sue on a judgment is distinct from the right to issue execution. In the present case learned counsel for the appellant submitted that no injustice or prejudice would be caused to the respondent if leave is granted to the appellant. The learned judge had in his judgment considered this contention by the appellant. At p. 4 of his judgment he stated: The calculation of the interest as worked out by the plaintiff in the affidavit was as at 12 July 1992 making a total sum due amounting to RM74,134.09. I then asked Ms Karen Wilfred for the plaintiff whether plaintiff had given any explanation as to why it had not proceeded to enforce, as of 1992. Since no explanation was stated in the affidavit no doubt counsel could not give any explanation from the Bar. We agree with the learned judge that in an application under O. 46 r. 2 it is incumbent for the applicant to furnish sufficient reason to explain for their inaction. From the supporting affidavit the only reason put forth by the appellant in support of this application is the neglect of its former solicitors to initiate the necessary action. But again the appellant is also not free from 7 blame. From the affidavit in support is would appear that the appellant took more than two years to appoint the new solicitors after appellant failed to hear from its former solicitors. Having considered the matter we fully agree with the learned judge that the appellant failed to furnish sufficient reason to persuade the court to exercise the discretion in its favour”.

In the present case, the assigned properties were sold as early as on 18.1.2012.

After that, the Plaintiff took steps to commence winding up proceedings against the borrower (without a judgment) and the borrower was wound up on 1.6.2015. In November 2015, at a creditors’ meeting, it was ascertained that the borrower only had assets amounting to RM 1,700.00. The Plaintiff’s Counsel explained that the Plaintiff wished to exhaust all remedies against the principal debtor before commencing execution proceedings against the Defendants who are the guarantors. I am of the view that it is reasonable for the Plaintiff to want exhaust all its avenues of execution and enforcement against the borrower first before commencing execution against the guarantors which are the Defendants herein. This is in line with the provisions in the Insolvency Act 2017 that the creditor should exhaust all avenues of execution or enforcement against the principal debtor before seeking leave to 8 commence bankruptcy proceedings against the guarantor. Accordingly, I find that there is an acceptable explanation for the delay in executing the judgment against the Defendants and I allow the Plaintiff’s application for leave to execute the judgment against the Defendants after the expiry of 6 years. I make no order as to costs. Wong Chee Lin Judicial Commissioner Kuala Lumpur High Court Dated: 11th July, 2018 9 Solicitors For The Plaintiff Messrs Tuan Mohd Zain & Co Advocates & Solicitors B-08-03, Gateway Corporate Suites Gateway Kiaramas No. 1, Jalan Desa Kiara, Mont Kiara 50480 Kuala Lumpur Tel: 03-6205 2002 Fax: 03-6205 2003 Solicitors For The Defendant Messrs Zuraidah Naziha & Fadly Advocates & Solicitors No 73-3, Jalan Wangsa Delima 5