AmFraser Securities Pte Ltd v Poh Gaik Lye [2016] 4 MLJ 314

Court: Federal Court (Putrajaya)

Judges: Raus Sharif PCA, Zulkefli CJ (Malaya), Ahmad Maarop & Zainun Ali FCJJ

Date of Judgement: 20 April 2016

Topic: Setting Aside Bankruptcy Notice

Facts

2.     This judgment concerns the appeal by the Appellant against the decision of the Court of Appeal which overturned the decision of the High Court in which the High Court reversed the decision of the senior assistant registrar who had set aside the bankruptcy notice upon the application made by the Respondent.

3.     At first, the Appellant obtained a summary judgment against the Respondent in the sum of RM11,482,024.19 with interest at 13% from 17.12.1997 until date of settlement.

4.     On 18.12.2008, right after ten (10) years and 5 months after the judgment was obtained, the Appellant issued a bankruptcy notice.

5.     The Appellant, through its ex parte application obtained an order to extend the validity of the bankruptcy notice from 18.03.2009 until 17.03.2010 (‘extension order’).

6.     In the extension order, an order of substituted service was also granted.

7.     On 16.12.2009, the Respondent filed an application in the High Court for the order, inter alia, that the bankruptcy notice filed by the judgment creditor (‘1998 Order’) be set aside.

8.     One of the grounds given by the Respondent for setting aside the bankruptcy notice was that leave for issuance of the bankruptcy notice had not been obtained by the Appellant.

9.     Pursuant to that, the Respondent’s application to set aside the bankruptcy notice was allowed by the senior assistant registrar

10.  However, the High Court judge allowed the Appellant’s appeal thus the bankruptcy notice was reinstated.

11.  The Respondent then appealed to Court of Appeal and it allowed the appeal to set aside the bankruptcy notice and reinstated the decision of the senior assistant registrar.

12.  Aggrieved with the outcomes of the proceeding, the Appellant appealed to Federal Court to challenge the decision of Court of Appeal.

“(2) A bankruptcy notice under this Act shall be in the prescribed form and shall state the consequences of non-compliance therewith and shall be served in the prescribed manner:

Provided that a bankruptcy notice—

(ii) shall not be invalidated by reason only that the sum specified in the notice as the amount due exceeds the amount actually due unless the debtor within the time allowed for payment gives notice to the creditor that he disputes the validity of the notice on the ground of such mistake; but if the debtor does not give such notice he shall be deemed to have complied with the bankruptcy notice, if within the time allowed he takes such steps as would have constituted compliance with the notice had the actual amount due been correctly specified therein.”

2.     The Federal Court deliberated the three reasons from the Court of Appeal to set aside the bankruptcy notice.  The first is the defect in the extension order which the Court of Appeal held to be fatal.

3.     In the material facts of the case, the Federal Court did not dispute that the extension order from the Appellant contained the name of ‘Citibank Berhad’ instead of the Appellant’s name.

4.     At that given time when the Respondent applied to set aside the bankruptcy notice, she also applied to set aside the substituted service.

5.     After 3 months since the Respondent applied to set aside the bankruptcy notice, the Appellant then sought to remedy the defect by an application to amend the extension order which was allowed by the High Court on 10.03.2010.  The reason given was clerical mistake and/or accidental slip.

6.     The Court of Appeal held that the extension order containing the name ‘Citibank Berhad’ could not provide a valid extension because Citibank had no locus standi to that application for the extension of the bankruptcy notice.

7.     The substituted service order was also held to be as invalid service because the order suffered from the same defect.

8.     Pursuant to that the Court of Appeal ruled that the amendment order dated 10.03.2010 could not be revive as good as such order never had a life in the first place.

9.     The second ground given by the Court of Appeal to set aside the bankruptcy notice is the inconsistent reasons given by the Appellant in support of the application for substituted service.

10.  The Court of Appeal found that the two occasions of attempted service are inconsistent wherein the Appellant’s representative was told that the Respondent was not present at the premises whilst the affidavit of process server confirmed that the premises were closed and the calls were not answered.

11.  The Court of Appeal in this regard held that the inconsistency was not a petty mistake because for any application made to the court especially on an ex parte basis, an applicant must make full, frank and accurate disclosure to the Court.

12.  The third ground is the sealed order that was incomplete and unsatisfactory wherein the sealed order merely stated ’13% interest’ and not ‘13% interest per annum or month’ as commonly in any other orders.

13.  It is trite law that bankruptcy notice must be based on the sealed order of the judgment however in the Appellant’s case, it was not clear thus the Court of Appeal held that the bankruptcy notice did not conform to the terms of the sealed order of the judgment.

14.  The Federal Court agreed with the decision of the Court of Appeal and decided that the grounds were sufficient to dispose the appeal from the Appellant.

2.     The bankruptcy notice is set aside and the appeal is dismissed with costs.

3.     The Court of Appeal’s decision is affirmed.

2.     The service of the bankruptcy notice by the publication of the substituted service order was not a valid service because the substituted service order (which was in the extension order) suffered from the same defect aforesaid.

3.     The discrepancy of the terms in the sealed order could not be dismissed as trivial because an applicant is required to provide the court with full, frank, and accurate disclosure when making any application to the court, particularly one that is made ex parte.