Quek Siew Eng v Malayan Banking Bhd (S-03(IM)-46-08/2020)

This is an appeal against the whole of the decision of the Learned High Court Judge ("Learned Judge") on 04.08.2020 in dismissing the Appellant's/Judgment Debtor’s appeal against the decision of the Learned Senior Assistant Registrar ("Learned SAR"). The 06/12/2022 07:45:06 S-03(IM)-46-08/2020 Kand. 30 S/N noZK7EbYjk2pwA7sfBnwZQ Learned SAR dismissed the application by the Appellant/Judgment Debtor for an Order of Discharge from Bankruptcy.

The Appellant/Judgment Debtor was adjudged a bankrupt on 24.06.2010. The Appellant/Judgment Debtor then applied for a discharge pursuant to Section 33(1) of the Insolvency Act 1967 ("the Act") on 17.07.2019 before the Learned SAR.

Upon hearing the parties, the Learned SAR dismissed the application of the Appellant /Judgment Debtor on 14.11.2019 and the Appellant /Judgment Debtor appealed to the Learned Judge on 18.11.2019.

On 04.08.2020, the Learned Judge dismissed the Appellant/Judgment Debtor’s appeal.

The Appellant/Judgment Debtor, being dissatisfied with the decision of the Learned Judge, appealed to this court.

The Learned Judge dismissed the Appellant/Judgment Debtor’s application for discharge and found inter alia as follows:-

(a) That the Appellant/Judgment Debtor had committed an offence under Section 16(3) of the Act as the S/N noZK7EbYjk2pwA7sfBnwZQ Appellant/Judgment Debtor had failed to disclose his co-ownership of a piece of Land in Sandakan with title reference CL 075328273 measuring approximately 911.37 square metres (the “said Land”), in his Statement of Affairs filed with the department of the Director General of Insolvency (“DGI”) which is in contravention of the mandatory requirement of Section 16(1) of the Act which is punishable under Section 16(3) of the same Act.

(b) That the Appellant/Judgment Debtor’s present application should be premised on Section 33 (4) of the Act and not on Section 33(1) of the Act as the Appellant/Judgment Debtor had committed an offence under the Act and the dividend payable should not be less than 50% as stipulated. Based on the Statutory Report dated 13.08.2019 of the Director General of Insolvency (“DGI’s Statutory Report”), the dividend payable did not reach the minimum of 50% as stipulated under Section 33(4) of the same Act.

(c) Although the DGI’s Statutory Report did not state that the Appellant/Judgment Debtor has committed any offence under the said Act, this Court is not entirely bound by the findings made by the DGI in the DGI’s Statutory Report as laid down in the case of Lok Kew v Nam Fatt Marketing Sdn Bhd [2019] 1 LNS

S/N noZK7EbYjk2pwA7sfBnwZQ

Before us, the Appellant advanced 3 main issues as follows:

(a) That the Learned Judge's finding that the Appellant/Judgment Debtor's application for discharge should be premised under Section 33(4) and not Section 33(1) of the Act is erroneous;

(b) That the Learned Judge has failed to apply the correct principles in holding that the Appellant/Judgment Debtor had committed an offence under Section 16(1) of the Act and in doing so, failed to take proper consideration of the DGI’s Statutory Report; and

(c) As the Appellant/Judgment Debtor has not committed any bankruptcy offence, it would not be necessary to look into the whether the Appellant/Judgment Debtor has satisfied the requirements under Section 33(4) of the Act for an order of discharge. Thus, the Appellant/Judgment Debtor's application for discharge would naturally fall under Section 33(3) of the Act. In fact, the Appellant/Judgment Debtor has satisfied the requirements laid down in Section 33(3) of the Act and ought to be discharged as a bankrupt. THE RESPONDENT’S CONTENTIONS

Before us, the Respondent/Judgment Creditor contended S/N noZK7EbYjk2pwA7sfBnwZQ inter alia as follows:

(a) That the Learned Judge correctly decided that the Appellant/Judgment Debtor’s application must be dealt with under Section 33(4) of the Act due to various offences committed by the Appellant/Judgment Debtor;

(b) That once an application has been made under Section 33(1) of the Act, the Court was only required to appoint a day for the hearing of the application which the Court had dutifully complied. The procedural requirement of Section 33(1) of the Act was fulfilled by the Court;

(c) That the Learned Judge did not err in law for not considering that the said Land has been subsequently sold through the DGI. The Appellant/Judgment Debtor had committed an offence under Sections 16(1) and 16(3) of the Act for non-disclosure of the said Land in his Statement of Affairs. The subsequent sale of the said Land has no relevance whatsoever to the offence under Section 16(1) and/or 16(3) of the Act;

(d) That the Learned Judge did not err in law in finding that the Appellant/Judgment Debtor had committed an offence even though there was no conviction;

(e) That the Learned Judge did not err in law and/or in fact in not considering the High Court case of Re Joshua S/N noZK7EbYjk2pwA7sfBnwZQ Tan Pin Pin; Ex p William Jacks & Co (M) Sdn Bhd [2007] 3 CLJ 153 which states that Section 33(4) of the Act is only activated when the bankrupt has been convicted of a bankruptcy offence;

(f) That the Learned Judge had given due consideration of DGI’s Statutory Report as required by the case of Lim Hun Swee v. Malaysia British Assurance Bhd & Ors And Other Appeals [2010) 8 CLJ 680 because the Learned Judge has discovered, from the DGI’s Statutory Report, crucial facts such as the failure of the Appellant/Judgment Debtor to disclose the said Land in his Statement of Affairs and that the DGI had subsequently discovered about the said Land from the Land Office; and

(g) That the Learned Judge has found that the Appellant/Judgment Debtor had contravened Section 16(1) of the Act and hence, committed an offence punishable under Section 16(3) of the Act, thus, the Learned Judge was correct to dismiss the appeal/application of the Appellant/Judgment Debtor. OUR ANALYSIS AND FINDINGS

We were mindful of the limited role of the appellate court in relation to findings of facts made by the court of first instance. In S/N noZK7EbYjk2pwA7sfBnwZQ the case of Lee Ing Chin v. Gan Yook Chin & Anor [2003] 2 CLJ 19; [2003] 2 MLJ 97 where the Court of Appeal held as follows: “ ….. an appellate court will not, generally speaking, intervene unless the trial court is shown to be plainly wrong in arriving at its decision. But appellate interference will take place in cases where there has been no or insufficient judicial appreciation of the evidence.” (emphasis added)

Reference is also made to the decision of the Federal Court in Gan Yook Chin & Anor v. Lee Ing Chin & Ors [2004] 4 CLJ 309 where the Federal Court held that the test of "insufficient judicial appreciation of evidence" adopted by the Court of Appeal was in relation to the process of determining whether or not the trial court had arrived at its decision or findings correctly on the basis of the relevant law and the established evidence.

Bearing in mind the above principles distilled from the above cases, we will now deal with the Appellant/Judgment Debtor’s appeal.

In the present case, the Appellant/Judgment Debtor is applying for a discharge by the Court pursuant to Section 33 of the Act which states as follows: “Section 33:

(a) refuse the order; or

(b) suspend the operation of the order for a specified time; or

(c) suspend the operation of the order until a dividend of not less than fifty per centum has been paid to the creditors; or

(d) grant an order of discharge subject to such conditions as aforesaid. S/N noZK7EbYjk2pwA7sfBnwZQ The powers of suspending and attaching conditions to a bankrupt's discharge may be exercised concurrently.

Insofar as the Learned Judge's finding that the Appellant/Judgment Debtor's application for discharge should be premised under Section 33(4) and not Section 33(1) of the Act, we are inclined to agree with the Appellant/Judgment Debtor’s contention that this particular finding of the Learned Judge is erroneous.

Firstly, the Learned Judge found that the Appellant/Judgment Debtor contravened Section 16(1) of the Act or committed an offence under this provision. This finding contradicts with the DGI’s finding in the DGI’s Statutory Report that the Appellant/Judgment Debtor has duly complied with the law regarding the submission of his Statement of Affairs which was filed on 06.07.2010 within the stipulated 21 days from the S/N noZK7EbYjk2pwA7sfBnwZQ date of service of the Receiving and Adjudication Orders granted in respect of the Appellant/Judgment Debtor.

Secondly, the Learned Judge’s finding that the Appellant/Judgment committed an offence under Section 16(3) of the Act, for not disclosing his co-ownership of the said Land is misconceived and erroneous as the "offence" referred to, in Section 16(3) of the Act relates to failure to submit the Statement of Affairs within 21 days and not the omission to disclose an asset in the Statement of Affairs which will lead to an offence under Section 33(4) of the Act.

Section 16(1) of the Act states as follows:- “(1) Where a bankruptcy order is made against a debtor he shall make out and submit to the Director General of Insolvency a statement of and in relation to his affairs in the prescribed form, verified by affidavit, showing the particulars of the his assets, debts and liabilities, the names, residences and occupations of his creditors, the securities held by them respectively, the dates when the securities were respectively given, the cause of his insolvency, the date when he last balanced his accounts before becoming insolvent, the amount of his capital at the date of such balance, after providing for all his liabilities and making allowances for bad and doubtful debts, and such further and other information as is prescribed or as the Director General of Insolvency requires.” (Emphasis Added)

Whilst Section 16(3) of the same Act states:- “(3) If the bankrupt fails without reasonable excuse, proof whereof shall lie on him, to comply with the requirements of S/N noZK7EbYjk2pwA7sfBnwZQ this section he shall be guilty of a contempt of court and may be punished accordingly.” (Emphasis Added)

Section 16(1) of the Act dealt with a bankrupt’s duty to make out and submit to the DGI, a statement of affairs in the prescribed form, verified by affidavit, showing inter alia the particulars of his assets, debts and liabilities, the names, residences and occupations of his creditors, the securities held by them respectively, the dates when the securities were respectively given and the cause of his insolvency. Section 16(3) of the Act provided that if the bankrupt, without reasonable excuse, fails comply with the requirements of section 16, the bankrupt shall be guilty of a contempt of court and may be punished accordingly.

Since the Learned Judge’s finding was that the Appellant/Judgment Debtor had failed to disclose his co-ownership of the said Land and accordingly committed an offence under section 16(1) of the Act which is punishable under section 16(3) of the same Act, we are of the considered view that such a finding constituted a serious error of the part of the Learned Judge as section 16(1) of the Act only dealt with the failure of the Appellant/Judgment Debtor, to submit to the Director General of Insolvency a statement of and in relation to his affairs in the prescribed form, verified by affidavit, showing the particulars of his assets, debts and liabilities, the names, residences and so forth. Section 16(1) of the Act does deal with the failure to disclose the Appellant/Judgment Debtor’s co-ownership of the said Land. S/N noZK7EbYjk2pwA7sfBnwZQ

The learned Judge fell into further error when he held that Appellant/Judgment Debtor’s application for discharge should dealt with under section 33(4) of the Act since the Appellant/Judgment Debtor had committed an offence under section 16 of the Act.

Having perused the Act and the facts and circumstances of this case, we are of the considered opinion that the Learned Judge’s presumption that the Appellant/Judgment Debtor had committed an offence is also erroneous as the Appellant/Judgment Debtor was not never charged in court for the offence of not disclosing his co-ownership of the said Land and convicted of the same.

We are inclined to hold that the phrase “that the bankrupt has committed any offence under this Act or under any written law repealed by this Act or under section 421, 422, 423 or 424 of the Penal Code [Act 574]” as contained in section 33(4) of the Act meant that the bankrupt must have been charged in court of law by the DGI for that offence and was convicted accordingly.

We are in agreement with the judgment of David Wong Dak Wah J (as he then was) in Development & Commercial Bank Bhd & Ors v. Loke Theen Fatt [2010] 5 CLJ 583 where he held:- “held: (2) The word "committed" in s. 33(4) of the Act meant that the bankrupt must have been charged in court by the DGI for that offence. Since the respondent had not been cited for contempt of S/N noZK7EbYjk2pwA7sfBnwZQ court by the DGI, the respondent had not committed any offence under the Act as specified under s. 33(4) of the Act. It followed that the application for the respondent's discharge must be dealt with pursuant to s. 33(3) of the Act. Section 33(3) provided the court some guidelines as to how to exercise its discretion on whether or not to grant an order for discharge. Those guidelines required the court to look into the totality of the evidence or circumstance of the bankrupt and then ask itself the question whether it was fair or just to grant a discharge. The starting point must be the DGI's report which in law must be taken as prima facie evidence of the respondent's conduct but it could be challenged by the creditors (Re Lau Kah Lay & Anor; ex p Cold Storage (M) Bhd; refd). (paras 5 & 6)” (Emphasis Added)

The case of Re-Joshua Tan Pin Pin; EX P William Jacks & Co

(M) Sdn Bhd [2007] 3 CLJ 153 is also instructive, where Kang Hwee Gee J (as he then was) held inter alia as follows:- “Held (1) Section 33(4) of the Act is applicable only if the bankrupt had been 'convicted' of a bankruptcy offence. In the present case, the Official Assignee ('OA') had merely made an observation that the said offence had been committed but the bankrupt was not charged with the offence nor did the OA deem it fit to institute any contempt proceedings against him. It followed that the application for discharge should be considered under s. 33(3) of the Act where the discretion of the court was fettered only by the consideration of equity, fairness and good conscience. (para 6)

We are guided by the Supreme Court case of Low Mun v. Chung Khiaw Bank Ltd [1987] 2 CLJ 400; [1987] CLJ (Rep) 172, Mohd. Azmi SCJ said: “... since bankruptcy is entirely a creation of statute law, the rule of strict construction should be applied to the legislative words creating the act of bankruptcy...” (Emphasis Added)

Further guidance can be found in In Re Chinery [1884] 12 QBD 342 @ 346 which is quoted in Halsbury's Laws of England, 4th Edn., Vol. 3 at pp. 161 and 162 under a paragraph dealing with non-compliance with bankruptcy notice where Bowen LJ inter alia states: “Where words are found in a section of an Act which is defining an act of bankruptcy they should be construed as strictly as if they occurred in a section which was defining an offence, because the commission of the act of bankruptcy entails disabilities to the person who commits it.” (Emphasis Added)

Thus, in the light of the above, we are of the considered view that the learned Judge’s finding that the Appellant/Judgment Debtor had committed an offence under section 16 of the Act is erroneous. The learned judge cannot summarily and arbitrarily convict the Appellant/Judgment Debtor, without the right to be S/N noZK7EbYjk2pwA7sfBnwZQ heard. The Appellant/Judgment Debtor may have an “reasonable excuse” or defence and he should be allowed to advance such a defence.

Since the Appellant/Judgment Debtor was never charged for an offence under section 16 of the Act, let alone convicted, the Leaned Judge’s findings was clearly wrong and without basis.

In the present case, the Appellant/Judgment Debtor was never tried or charged for any bankruptcy offence and this was acknowledged by the DGI in paragraph 39 of the DGI’s Statutory Report which states that the Appellant did not commit any offence under Sections 421, 422, 423 and 424 of the Penal Code.

In so far as the Learned Judge’s decision to consider the Appellant/Judgment Debtor’s application under section 33(4) of the Act, we are of the considered view that such a decision is without basis and wrong as the Appellant/Judgment Debtor was never charged, tried or convicted of any offence. In the premises, the Appellant/Judgment Debtor’s application ought to be considered under section 33 of the Act.

We are of the considered view that the Learned Judge’s reliance on the case of Lok Kew v Nam Fatt Marketing Sdn Bhd [2019] 1 LNS 1162, is erroneous too. ln Lok Kew supra, the bankrupts clearly breached Section 16(1) of the Act by failing to file their Statement of Affairs within 21 days of the Receiving and S/N noZK7EbYjk2pwA7sfBnwZQ Adjudication Order and also did not complied with the monthly repayments as required. However, in the present case, there was no contravention of Section 16(1) of the Act as the Appellant/Judgment Debtor had punctually filed his Statement of Affairs and has been paying RM200 per month to the DGI since July 2010, which sum was later increased to RM500.

Thus, we are of the considered view that the Learned Judge has failed to apply the correct principles in holding that the Appellant/Judgment Debtor had committed an offence under Section 16(1) of the Act and in doing so, failed to take proper consideration of the DGI’s Statutory Report.

Since the Appellant/Judgment Debtor has not committed any bankruptcy offence, the learned Judge’s decision to consider the Appellant/Judgment Debtor’s application under Section 33(4) of the Act for an order of discharge, is also without basis and erroneous. Thus, the Appellant/Judgment Debtor's application for discharge should fall under Section 33(3) of the Act.

In support of the Appellant/Judgment Debtor's application for discharge u nder Section 33(3) of the Act, the Appellant/Judgment Debtor averred inter alia that at the material time when he was adjudged a bankrupt, he was working as a Manager for Syarikat Belus Hasil Sdn Bhd with a monthly income of RM3,000.00. He was then given sanction by the DGI to continue to hold the post of Manager in the same company on S/N noZK7EbYjk2pwA7sfBnwZQ

02.08.2011.

Further, after the Appellant/Judgment Debtor was adjudged a bankrupt on 24.06.2010, he filed his Statement of Affairs on 06.07.2010 which was within the stipulated 21 days under Section 16(2) of the Act. The DGI confirmed that the Appellant/Judgment Debtor presented himself before the DGI for interview and questioning on 25.06.2010. The First Creditors' Meeting in respect of the estate of the Appellant/Judgment Debtor was held on 12.12.2013.

Based on the DGI’s Statutory Report, the total Proof of Debts received by the DGI amounted to RM21,298,509.06 owed by companies in which the Appellant/Judgment Debtor was being sued as one of the guarantors under Suits No.s S2-04/2006, S2- 08/2006, S2-09/2006, S2-11/2008, S2-05/2008 and S22-10/2006 respectively. The Proof of Debts were submitted on 30.08.2010 which was shortly after the Appellant/Judgment Debtor was adjudged bankrupt on 24.06.2010. The total amount of Proof of Debts admitted by the DGI is RM19,915,297.78.

The DGI’s Statutory Report also stated that the Appellant has been paying RM200 per month to the DGI since July 2020, which was later increased to RM500 per month from August

It is clear that the Appellant/Judgment Debtor has been paying his debts diligently and is deeply interested in getting a discharge from his bankruptcy. S/N noZK7EbYjk2pwA7sfBnwZQ

Moreover, the DGI has declared 3 dividends amounting to RM205,127.57 to the creditors in respect of the monies realized by them. The DGI also stated in paragraph 38 of the DGI’s Statutory Report that during the course of their administration of the estate of the Appellant/Judgment Debtor’s bankruptcy case, he had always complied with all the directions issued by the DGI and those under the Act. The DGI’s Statutory Report also concluded that none of Appellant's/Judgment Debtor’s conduct and affairs would bar the Appellant/Judgment Debtor from being discharged from bankruptcy.

In the present case, at the time when the Appellant/Judgment Debtor applied for the current discharge on 17.07.2019, he was 60 years of age and has been living with the stigma of being a bankrupt for the last 10 years. We noted that this is not a case where the Appellant/Judgment Debtor was adjudged a bankrupt arising from his personal debt but as a result of him being a guarantor, to secure banking facilities for the bona fide business of his companies.

Our consideration of the facts and circumstances of the Appellant/Judgment Debtor’s application showed that the Appellant/Judgment Debtor has satisfied the requirements laid down in Section 33(3) of the Act and ought to have been discharged as a bankrupt. S/N noZK7EbYjk2pwA7sfBnwZQ Conclusion

In the light of our above findings, we are of the considered opinion that the Learned Judge made errors in material findings of facts which warranted appellate intervention. We are of the respectful view that there are merits in this appeal and we unanimously allow the appeal and the Appellant/Judgment Debtor’s application for discharge from bankruptcy pursuant to Section 33 of the Insolvency Act 1967 is allowed and the Appellant/Judgment Debtor is thereby discharged from bankruptcy. The order of the Learned Judge dated 04.08.202 dismissing the Appellant/Judgment Debtor’s application for discharge is set aside. We further award costs of RM5,000.00 subject to allocator to Appellant/Judgment Debtor. Dated this 5th day of December, 2022. -sgd- ………………………………. LEE HENG CHEONG JUDGE COURT OF APPEAL Appellant’s counsel : Mr. Norbert Yapp Messrs. Norbert Yapp & Associates Advocates & Solicitors Respondent’s counsel : Mr. Wong Chik Yoong Messrs. Sia Mojilip Advocates & Solicitors S/N noZK7EbYjk2pwA7sfBnwZQ