Re: Azzubair Bin Abdul Rahman v Ex-Parte: Bank Muamalat Malaysia Berhad (BA-29NCC-435-01/2016)

This is an appeal against the decision of the Senior Assistant Registrar by the Judgment Debtor (JD) where its application to set aside the Bankruptcy Notice (BN) by the Judgment Creditor (JC) was dismissed on 22.3.2013. 2

The JC obtained a Judgment of 22.5.2013 (pages 70-71 of the Common Core Bundle) in the amount of RM2,949,137.51 against the JD, one of the guarantors and two others, Isa Abdul Rahman Sdn Bhd who is the borrower (the Borrower) and JD’s brother, Isa Abdul Rahman, the other guarantor.

Based on JD’s letter of 29.4.2014 (page 77 of Common Core Bundle) signed by Isa Abdul Rahman Sdn Bhd, the Borrower proposed an instalment payment (pages 73-74 of Common Core Bundle) and the JC agreed on the repayment by installment with some terms among others that if there was any breach, “the full outstanding balance (less payments made) shall become payable immediately due and payable” (dated 5.5.2014, pages 76-77 of Common Core Bundle).

Having breached by the Borrower, the JC filed a BN against the JD for the outstanding balance.

The JD applied to set aside the BN on 9.6.2016 based on Rule 95(1) of Bankruptcy Rules 1969 but withdrew the application on 18.1.2017. While the first application was pending, the JD filed another application to set aside the BN under Rule 18 of Bankruptcy Rules 1969 on 12.1.2017.

The second application to set aside was dismissed on 7.4.2017 and this appeal is against the dismissal of the second application. 3

The learned counsel for JD’s main contention is that the amount claimed by JC is inaccurate and that the JD should be liable for one-third of the Judgment sum. The counsel for JD relied on the authority Re Dato’ Dr Elamaran M Sabapathy [2011] 10 CLJ 262 and the case of Sumathy a/p Subramaniam v Subramaniam a/l Gunasegaran (and Another Appeal) [2017] 5 AMR 346.

The counsel for the JD further submitted that the Judgment had been substituted with the payment arrangements as stated in JC’s letter which is controlled by an outside agreement between the JC and the JD’s brother, Isa bin Abdul Rahman. It was also argued that the JC had breached the payment arrangements by not holding a yearly review in April 2015 as stated in JC’s letter of 5.5.2014

The learned counsel for the JC objected to JD’s line of argument on the substitution of the Judgment with the proposed agreement. The JC’s counsel averred that the proposed payment by instalment was from JD’s Borrower and guarantors where JC agreed with a counter proposal of 5.5.2014 (pages 76-77 of Common Core Bundle) to Encik Isa, JD’s brother with the terms as provided under Clause VI which states that, “if there was any breach, “the full outstanding balance (less payments made) shall become payable immediately due and payable..” 4

The counsel submitted that Isa Bin Abdul Rahman had defaulted in July 2014)(pages 63, 76-77 of Common Core Bundle) and therefore the full outstanding balance shall become payable from Isa Bin Abdul Rahman and the JD. The JC’s counsel further averred that the JC’s letter did not provide any substitution of Judgment with payment arrangements, claiming JD’s allegation is baseless.

The counsel averred that the BN provides the detailed breakdown where the Judgment sum is RM2,949,137.51 and costs at RM30,000.00 and after deducting the sum of RM492,500.00, the balance is RM2,486,637.51 (page 63 of Common Core Bundle) and that the JD did not object to the said amount.

It was averred that the two applications filed by JD to set aside the BN constitute an abuse of Court process. The counsel for JC further submitted that the Judgment entered are against the three defendants and the absence of the words “jointly and severally” does not negate the fact that they are all jointly and severally liable for the Judgment debt and relied on a number of authorities, Dynasty Rangers Sdn Bhd v Perak Meat Industries Sdn Bhd [2002] 5 MLJ 291 and the recent case of Khaw Hock Chye v Yeoh Gaik Tin @ Tao Yong [2017] MLJU 299.

Chronologically, this Court finds that there were multiple applications by the JD where similar grounds of the first application were submitted in its second application (exhibit “BMMB-1”, page 9 of JC’s Affidavit). Based on 5 the multiple applications by JD, this Court has the duty to suppress any abuse of the Court’s process under Order 92 rule 4 of Rules of Court 2012.

Upon careful perusal of the documents and the Affidavit of JC dated 13.2.2017, it is this Court’s finding that the breach of the installment payment was caused by the JD’s Borrower, to which the JD as one of the guarantors are liable in the event of a breach based on the last paragraph VI (at page 77 of Common Core Bundle) where the JC, “reserves the rights to proceed with legal action against the company and the guarantors should you default in any of the above terms and conditions.” Based on the evidence adduced, I cannot agree with the argument forwarded by the JD that the BN, served in 2016, was substituted with the payment installment agreement. Simply put, the JD’s brother, the Borrower had defaulted in July 2014 immediately after the payment installment was agreed and the BN was served in 2016 after the breach occurred.

Clause VI of the agreement to the installment payment dated 5.5.2014 (page 76 of Common Core Bundle) clearly stated that, “VI. In the event of any breach of any of the above conditions or of any default in any of the above payments as and when they fall due, the full outstanding balance (less payments made) shall become immediately due and payable from the customer, Isa Abdul Rahman 6 Sdn Bhd and the Guarantors, Isa Bin Abdul Rahman (NRIC No: 570823-07-5623) and Azzubair Bin Abdul Rahman (NRIC No: 681024-07-5573).” It is expressly stated in the installment payment agreement that in the event of a breach, the JC may claim against the Borrower and the guarantors, including the JD.

Therefore in view of the existence of an express agreement as to the payment arrangement and the default clause, the ground raised by JD that the three of them should not be subjected to the exact payment does not hold water. There are clear terms on the breach which triggered the cause of action against JD as affirmed by JC (paragraphs 8.3 - 8.5 of JC’s Affidavit, pages 36-37 and pages 76-77 of Common Core Bundle). The cases relied by JD should be distinguished from this facts.

In addition, I had decided in a recent case last year where bankruptcy action can be taken against any of the judgment debtors based on the Judgment ordered particularly where there is a possibility of a winding up involving the borrower, as in the case of Firoz Husain Bin Akbarally v Public Bank Berhad [29NCC-9440-11/2015] of Lim Koon Chow v AmBank (M) Bhd [2012] 8 MLJ 285, “The JC always has a choice to decide which of the three defendants to proceed against with respect to execution. So in a case where D1 has been wound-up and D4 is a bankrupt for instance, the JC would proceed to execute the whole judgment against D2.” 7

This Court holds the view that the Senior Assistant Registrar was not wrong in law to dismiss the JD’s second application. In light of the above reasons, I dismiss the appeal with cost. Date: 29 January 2017 (ZALITA BINTI DATO’ ZAIDAN) Judicial Commissioner Shah Alam High Court 8 COUNSEL FOR THE JUDGMENT DEBTOR KESHVINJEET SINGH SIDHU Tetuan Balwant Singh & Co. No. 69, Lebuh Bishop 10200, Pulau Pinang [Ref: BS/A1/16/gs] Tel: 04-2619 478 Fax: 04-2635 454 COUNSEL FOR THE JUDGMENT CREDITOR AZLAN SULAIMAN Tetuan Azmi & Associates 14th Floor, Menara Keck Seng 203, Jalan Bukit Bintang 55100 Kuala Lumpur [Ref: A&A/AZS/1000579] Tel: 03-2118 5000 Fax: 03-2118 5113