Sunday, 16 June 2013

MALAYSIA-WHETHER A JUDGMENT CREDITOR WANTING TO FILE BANKRUPTCY PROCEEDINGS ON A FINAL JUDGMENT THAT WAS MORE THAN SIX YEARS OLD HAD TO FIRST OBTAIN LEAVE OF COURT TO ISSUE EXECUTION PURSUANT TO O 46 r 2(1)(a) OF THE RULES OF THE HIGH COURT 1980 ('RHC')

In the Federal Court case of AmBank (M) Bhd (formerly known as AmFinance Bhd) v Tan Tem Son and another appeal [2013] 3 MLJ 179, it was held that:-

"...[58] With respect we have a different view. As we have said, the answer to the first leave question depends on the interpretation to be given to the phrase 'if a creditor has obtained a final judgment or order ... and execution thereon not having been staved' in s 3(1)(i) of the  BA 1967,  and the phrase, 'any person who is for the time being entitled to enforce a final judgment or final order shall be deemed to be a creditor who has obtained a final judgment or final order' in the proviso to the section. At the time Woodall and Re Ide were decided, there was no proviso (equivalent to the proviso to s 3(1)(i) of the  BA 1967) under s 4(1)(g) of the English Bankruptcy Act 1883. Woodall and Re Ide interpreted the phrase 'if a creditor has obtained a final judgment or final order and execution thereon not having been staved' under s 4(1)(g) of the Bankruptcy Act 1883 to mean that even if the judgment had not been stayed, the phrase implied that the judgment must be one upon which execution could go on immediately. In effect it means if execution could not go on immediately upon the judgment, a stay will be implied. In other words apart from there being no express stay by the court upon a stay application, there should not be any other impediment to issue execution on the judgment. If there is an impediment, a stay is implied. This is where the interplay of the provisions in the Rules of Court relating to execution with leave of court (as illustrated in the factual situations in Woodall and Re Ide) and s 4(1)(g) of the Bankruptcy Act 1883 was applied by the English Court of Appeal in Woodall and Re Ide. The question is must implication be read into the phrase 'if a creditor has obtained a final judgment or final order ... and execution thereon not having been staved' under s 3(1)(i) of the  BA 1967 ?. Must a strained interpretation as aforesaid be given to our s 3(1)(i) when there is a proviso to that section to assist in the interpretation of 'creditor' in that section. The proviso is in the form of a presumption. If a person can establish that he is a 'person who is for the time being entitled to enforce a final judgment or final order' then he 'shall be deemed to be a creditor who has obtained a final judgment or final order'. The use of the words 'entitled to enforce' instead of 'entitled to execute' is to our mind deliberate. The crucial question then is, who is a person who is entitled to enforce a final judgment or final order? This is where to our mind the decision of this court in Lim Ah Hee is instructive. In Lim Ah Hee in delivering the judgment of this court, Abdul Hamid Mohamed FCJ said that:
clearly a bankruptcy notice or a bankruptcy petition cannot be a 'writ of execution'. So, in my view, our courts have been correct in holding the view that no leave of court is necessary to issue a bankruptcy notice after six years as required by O 46 r 2 of the RHC 1980.

[59] In our view, that statement albeit obiter, being a judicial pronouncement emanating from the highest court in the country, deserves utmost respect. More importantly however, there is another part of His Lordship's judgment which we find very relevant and indeed conclusive in answering the question who is a person who is entitled to enforce a final judgment? This was when His Lordship dealt with the issue whether a bankruptcy proceeding is an 'action' within the meaning of s 6(3) of the  Limitation Act 1953 as defined in   s 2 of the  same Act :
We have seen from the decided cases and I agree that a bankruptcy proceeding is not 'a writ of execution' within the meaning of O 46 r 2 of the RHC 1980. But, that does not necessarily mean that it is therefore 'an action' within the meaning of s 6(3). We still have to consider the meaning of 'an action upon any judgment' in the light of the definition given in   s 2 of the Limitation Act 1953 that includes 'a suit or any other proceeding'.
Of course, by merely looking at the word 'action' in s 6(3) it appears that the word 'action' does not include a bankruptcy proceeding. It is also clearly not a 'suit', one of the words used in the definition of the word 'action' in s 2. But, is it not a 'proceeding in a court of law' 'upon any judgment' (I am reading the provisions in ss 2 and 6(3) together).
I do not think that it can be argued that a bankruptcy proceeding is not proceeding in court. Neither can it be argued that it is not based upon a judgment. There has to be a judgment before a bankruptcy proceeding can be commenced. Then going by the definition of 'action' in s 2, it is an 'action' and an action upon a judgment.
A question then may be asked: on the same reasoning, is an 'execution' not a 'proceeding in court'? Of course it is a proceeding in court but, I think, the distinction lies in the fact that execution is the continuation of the existing proceeding to enforce the judgment provided by the same rules of court, the RHC 1980. On the other hand, bankruptcy proceedings are provided by separate law and rules, the focus being the judgment debtor, not the debt and the object is to appoint a receiver in the person of the official assignee over the assets of the debtor and to convert the status of the debtor into a bankrupt with certain disgualification and disabilities, the most important being the loss of control over his properties to the official assignee. The fact that it is based on a judgment does not necessarily make it a continuation of the existing proceeding.
Section 6(3) itself is about 'action upon a judgment'. Though the existence or non-existence of a cause of action may or may not be a factor to be considered, if we say that for there to be action there must be a cause of action, then the existence of a judgment and the failure to satisfy the judgment debt itself is a cause of action. In any event, it is a remedy provided by law, whether it is to be considered as a cause of action or not, is relevant. Furthermore, a bankruptcy proceeding is bv way of petition, just like divorce, winding-up or election, to name a few. Thus a bankruptcy proceeding bears the characteristics of a fresh proceeding unlike an execution proceeding.
On these grounds, I am inclined to the view that a bankruptcy proceeding, by definition of the word 'action' in s 2 of the Act is an 'action' and it is caught by the provisions of 6(3).

[60] In conclusion His Lordship said:
It is my considered opinion that a bankruptcy proceeding is an 'action upon a judgment' within the meaning of s 6(3). The limitation for bringing the action is twelve years but the arrears of interest may only be claimed for six years.

[61] In this regard s 6(3) of the  Limitation Act 1953 provides:
(3) An action upon any judgment shall not be brought after the expiration of twelve years from the date on which the judgment became enforceable and no arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years from the date on which the interest became due.

[62] It is clear from the aforesaid judgment that a bankruptcy proceeding is not a writ of execution within the meaning of O 46 r 2 of the RHC 1980, and that unlike execution which is the continuation of the existing proceeding to enforce a judgment provided by RHC 1980, bankruptcy proceedings are provided by separate law and rules, the focus being the judgment debtor, not the debt and the object is to appoint a receiver in the person of the official assignee over the assets of the debtor and to convert the status of the debtor into a bankrupt with certain disqualification and disabilities, the most important being the loss of control over his properties to the official assignee. Unlike an execution proceeding, a bankruptcy proceeding bears the characteristics of a fresh proceeding. Thus a bankruptcy proceeding is an action caught by the provision under s 6(3) of the  Limitation Act 1953. It is an action upon a judgment, ie, an action to enforce a judgment. Such being the case O 46 r 2 of the RHC does not apply. Since a bankruptcy proceeding is an action upon a judgment within the meaning of s 6(3) of the  Limitation Act 1953, and limitation for bringing the action is 12 years, a judgment creditor is entitled to enforce a final judgment by instituting bankruptcy proceeding without the leave of the court within that period of twelve years. In other words, if the judgment creditor institutes a bankruptcy proceeding (to enforce a final judgment) within that 12 year period, he 'shall be deemed to be a creditor who has obtained a final judgment or final order' within the meaning of s 3(1)(i) of the  BA 1967. Further, in our view, since O 46 r 2 of the RHC does not apply to bankruptcy proceeding, there is no reason or justification to use it to read into the phrase, 'execution thereon not having been stayed' in s 3(1)(i) of the  BA 1967, the implication that in addition to there being no stay of execution by the court, the creditor must be in a position to issue immediate execution. The only bar for the institution of bankruptcy proceeding is the limitation under s 6(3) of the  Limitation Act 1953.

[63] For the reasons which we have given, our answer to the first question is as follows. The phrase 'any person who is for the time being entitled to enforce a final judgment' in the proviso to s 3(1)(i) of the  Bankruptcy Act 1967 does not require a judgment creditor to obtain leave pursuant to O 46 r 2(1)(a) of the Rules of the High Court 1980 prior to initiating a bankruptcy proceeding based on a final judgment which has been obtained more than six years ago...."

MALAYSIA-WHETHER NON-SERVICE OF DRAFT RECORD OF APPEAL BEFORE FILING FATAL



In the Court of Appeal case of Mazni bt Ibrahim v Rosaidy Effandy dari Tetuan Khairil & Co [2013] 2 MLJ 499, it was held that:-

"...[20] The record of appeal now before this court was not served upon the respondent's counsel before filing it. We observed that the purported the respondent's written submission sought to be admitted through encl 8a is only part of the record of appeal. Allowing encl 8a would not have remedied non service of the draft record of appeal before it was filed. Such failure is a fundamental threat to the reliability of records of appeals before the appellate courts that it cannot be countenanced under any circumstances. Such defect is, therefore, fatal to the record of appeal. Without a record of appeal filed, the appeal is fundamentally defective.
[21] We considered whether the defect is curable. It is provided in    r 3A of the   Rules of the Court of Appeal 1994 that:
3A Preliminary objection on the ground of non-compliance shall not be allowed.
A Court or Judge shall not allow any preliminary objection by any party only on the ground of non-compliance of any of these Rules unless the Court or Judge is of the opinion that such non-compliance has occasioned a substantial miscarriage of justice.

[22] In principle, r 3A is similar to     O 1A of the   Rules of the High Court 1980. If there is any misconception that O 1A, and therefore r 3A is panacea to non-compliance with the rules of court, it has been decisively dismissed in Duli Yang Amat Mulia Tunku Ibrahim Ibni Sultan Iskandar Al-Hai v Datuk Captain Hamzah Mohd Noor and another appeal [2009] 4 MLJ 149; [2009] 4 CLJ 329 (FC) where the Federal Court held at para 50 of the judgment that:
As I had mentioned in court, if O 1A is sought to be invoked whenever a party fails to comply with any provision of the rules, then the whole of the Rules of the High Court 1980 would be rendered useless. For example, can failure to enter appearance or file defence within the specified period be considered as an irregularity? Of course it cannot be. A party who is late in filing the relevant papers must obtain an order from the court to extend the time, if such extension is required and is permitted by the rules. Therefore, the answer to question two is in the negative...."

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