Malayan Banking Berhad v Poh yang Hong (WA-29NCC-373-05/2023)

Enclosure 31 is the Judgment Creditor’s (“JC”) appeal against the decision of the learned Senior Assistant Registrar given on 15.09.2023 in allowing with costs of RM2,000.00 the Judgment Debtor’s (“JD”) application vide summons-in-chambers dated 19.05.2023 (enclosure 7) to set aside the request to issue bankruptcy notice and the bankruptcy notice, BN both date 02.05.2023.

The primary grounds cited by the JD to support the application in Enclosure 7 are: a) The request to issue the BN is invalid as it is based on a judgment the terms of which are uncertain because the amount demanded in the BN was not quantified, including the interest claimed. S/N z4/U1vvfnEqJErrbrPQm9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal 3 b) The BN is void due to the calculation of interest on a compounded basis, whereas the judgment did not stipulate that the interest charged is to be compounded. Therefore, the resulting amount including the compounded interest is in excess of the amount due under the judgment.

A bankruptcy notice can only be issued based on a judgment or order, which is certain, and which by its terms orders the payment of an amount which is certain. This is provided for in Section 3(1)(i) of the Insolvency Act 1967. In addition, the BN notice when issued, must strictly follow the terms of the judgment. In the matter before this court, the terms of the judgment relating to payment of interest are uncertain, and subject to fluctuations in the future.

The part of the judgment reproduced in the BN contain the words “faedah yang dikenakan atas jumlah tersebut dengan kadar pinjaman asas tolak 2.85% setahun”

“Kadar pinjaman asas” clearly refers to the base lending rate (“BLR”) of the Bank. However, the BN did not disclose or stipulate the BLR, thus it would be difficult for the JD to determine the total interest S/N z4/U1vvfnEqJErrbrPQm9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal 4 payable to the JC. This create uncertainty in the amount payable under the BN.

Additionally it is a known fact, which I have taken judicial notice that the Bank’s BLR, changes from time to time and thus the amount claimed by the JC would also fluctuate with the changes in the JC’s BLR.

In essence the JC submits that any excess in the amount claimed in the BN or any other irregularities in the BN are mere formal defects which are cureable under the provision of section 3(2)(ii) of the Insolvency Act 1967 which prescribes that any formal defects shall not invalidate a BN by reason only that the sum specified in the notice as the amount due exceeds the amount actually due unless the JD within the time allowed for payment gives notice to the JC that he disputes the validity of the notice on the grounds of the mistake.

The JC further submits that the alleged irregularity of the BN can only be set-aside at the stage of the filing of the Petition and not before the act of bankruptcy. S/N z4/U1vvfnEqJErrbrPQm9Q **Note : Serial number will be used to verify the originality of this document via eFILING portal 5

I am persuaded by the JD’s submission on the issue of uncertainty in the BN as to the exact amount payable, particularly when the applicable BLR was not specified in the BN.

In support of my findings above I refer to the case of Re Lim Beng: Ex Parte Eric Lau Maa Hing (2003) 8 CLJ 697, where the learned judge held: “(1) However, having seen the order upon which the bankruptcy proceedings were premised, it was clear that there was uncertainty in the terms of the said order of court”

The judgment per se was ambiguous as to its terms against the judgment debtor… The JC in the circumstances ought to apply to the court making the order, to correct the uncertainty, and until that was done, no bankruptcy proceedings ought to be commenced against the JD” [11] With respect to the issue of compound interest being charged in the BN, the JC submits as follows: “On the issue of compound interest, multiple facility agreements entered into between the parties confer the JC contractual right to impose compound interest as opposed to simple interest prescribed in the Settlement Agreement which was terminated when the JD failed to pay the amount agreed therein.” [12] The JC further submits the judgment dated 08.09.2021 (“the 2021 Order”) made express reference to the abovementioned Agreements S/N z4/U1vvfnEqJErrbrPQm9Q and the BN merely corresponds to the terms of the 2021 Order. The JD withdrew his appeal against the 2021 Order and thus, is bound by the terms of the 2021 Order and is in no position to deny its debt obligation at this juncture. [13] Again I am persuaded by the decision of the court in Ghazali bin Mat Noor v Southern Bank Berhad (1989) 2 MLJ 142 where the Judge held: “Held – (1) For a bankruptcy notice to be valid it should state the exact amount due at the date of the bankruptcy notice. The judgment debtor must know the exact amount he has to pay to avoid bankruptcy. He does not have to make calculations or enquiries..” [14] The conflict between the amount as demanded in the body of the bankruptcy notice (RM103,805,025.67) and the amount demanded as particularized (RM110,495,823.77) is confusing, perplexing and misleading. I agree with the JD’s submission that the BN is void because of the lack of certainty in the amount to be paid by the JD and ought to be set aside. [15] In reading the terms of the 2021 Order, I find the judgment did not provide for calculation of interest to be compounded, thus the submission by the JC on this issue is misconceived. The exact terms of the 2021 Order are reproduced below: S/N z4/U1vvfnEqJErrbrPQm9Q i) “(b)… Defendan membayar kepada plaintif sejumlah RM98,222,120.33 ….(c) … dengan faedah yang dikenakan atas jumlah tersebut dengan kadar pinjaman asas plaintif tolak 2.85% setahun..” ii) “(e) …Defendan membayar kepada plaintif sejumlah RM5,582,905.34 … dengan faedah yang dikenakan atas jullah tersebut dengan kadar pinjaman asas plaintif tolak 2.85% setahun..” [16] One would note that the malay equivalent of the words “with monthly rests, or with daily rests” which denotes the compounding of interest is absent from the terms of the 2021 Order. [17] For the above reasons, I find that the Senior Assistant Registrar was correct in his decision to allow the JD’s application in Enclosure 7. Therefore, I dismiss the JC’s appeal in Enclosure 31 with costs. Dated 08 April 2025 …………t.t….……………. Ahmad Murad Bin Abdul Aziz Judge High Court of Malaya Kuala Lumpur S/N z4/U1vvfnEqJErrbrPQm9Q COUNSEL FOR THE JUDGMENT DEBTOR: PETER PEREIRA SOLICITORS FOR THE JUDGMENT DEBTOR: TETUAN PETER PEREIRA COUNSEL FOR THE JUDGMENT CREDITOR: BRIAN ERNEST CUMMING SOLICITORS FOR THE JUDGMENT CREDITOR: TETUAN GIDEON TAN RAZALI ZAINI Cases Referred to: ➢ Re Lim Beng: Ex Parte Eric Lau Maa Hing (2003) 8 CLJ 697 ➢ Ghazali bin Mat Noor v Southern Bank Berhad (1989) 2 MLJ 142 Legislation Referred to: ➢ Companies Act 2016 ➢ Insolvency Act 1967 Decision date: 18 March 2024 S/N z4/U1vvfnEqJErrbrPQm9Q