Azman Bin Jufri v Medtronic Australasia Pty Ltd [2015] MLJU 270

AZMAN BIN JUFRI v MEDTRONIC AUSTRALASIA PTY LTD [2015] MLJU 270

Court of Appeal (Putrajaya)

Amendment on Creditor’s Petition  

Facts 1.   This case concerns one Azman Bin Jufri, a judgment debtor and Medtronic Australasia Pty Ltd as the judgment creditor.

2.     For clarity, the judgment debtor (“JD”) is the Appellant in this case while the judgment creditor (“JC”) is the Respondent in this case.

3.     The judgement debtor, who is the appellant in this case, is asking the learned High Court Judge to affirm the decision made by the Senior Assistant Registrar when the judgement debtor’s motion was dismissed.

4.     Previously, the JC had applied to make several amendments on its Creditor’s Petition.

5.     The JD then came up with contentions of objecting the said application where the Senior Assistant Registrar had allowed the amendment to be made to the Creditor’s Petition.

6.     For avoidance of doubt, there were two Appeals made, namely Appeal No. 85 which relates to JD appealing against the decision of the learned High Court in dismissing the JD’s application and Appeal No. 86 in approving the Creditor’s Petition modifications.

7.     The Court shall heard both of the appeals together as it were tied from the same bankruptcy proceedings.

8.     On March 14, 2012, the JC obtained summary judgement against JD for RM8,687,247.45 with interest and costs.

9.     The summary judgment secured by the JC is a final judgment for their case as both the Court of Appeal and the Federal Court had dismissed JD’s appeal for the summary judgment.

10.   Pursuant to that, on 15 April 2013, a Bankruptcy Notice was issued against JD requesting payment of the judgment debt.

11.    On 26 April 2013, the service of the Bankruptcy Notice was completed by way of substituted service.

12.    On 21 June 2013, the JC completed the service of its Creditor’s Petition after having filing it on 7 June 2013.

13.  Crucially, the JC then submitted a request for permission with the intention of revising the creditors’ petition, specifically to substitute “30/05/2013” for “28/05/2013” concerning the date of the act of bankruptcy as provided in the Creditor’s Petition.

14.  The Senior Assistant Registrar (hereinafter referred to as “SAR”) had allowed the leave to amend the Creditor’s Petition 26 March 2014.

15.   JD filed a Notice of Appeal to a judge in Chambers against the SAR’s order after learning the application had been granted on 3 April 2014.

Issue 1.     Whether the amendment made on the Creditor’s Petition had prejudiced the JD?

2.     Whether the omission to annex the petition to the verifying affidavit render the proceedings null and void?

3.     Whether the orders for the substituted service were valid?

Ratios 1.     The issue on prejudicial Creditor’s Petition on Appeal No. 86:

(a)  It is contended by the JD that the amendment made by JC was mala fide as there had been a wrong insertion of the date of the alleged act of bankruptcy.

(b)  The JD also asserted that the JC was estopped from changing the date of the act of bankruptcy.

(c)  The Court however is of the view that the mistake made by the JD on “28.5.2013” instead of “30.5.2013” being the date of the alleged act of bankruptcy in the Creditor’s Petition had not prejudiced the JD because the filing of the deadline of seven days following the filing of the bankruptcy act is met by the creditor’s petition.

(d)  The Court made reliance to Section 131 of Bankruptcy Act 1967 (Act 360) which provides that –

“Formal defect not to invalidate proceedings

131. No proceeding in bankruptcy shall be invalidated by any formal defect or by any irregularity, unless the court before which an objection is made to the proceeding is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by any order of that court.

(e)  A regularisation of the Creditor’s Petition was made accordingly by taking into account the above authority, therefore, This Court upheld the learned High Court’s ruling that the error in the act of bankruptcy’s date did not substantially impair the administration of justice.

2.     The issue on nullifying the petition due to the failure in verifying the affidavit for Appeal No.85 :

(a)  This issue concerns the question of fact whether the failure for the copy of the Creditor’s Petition to be annexed to the Affidavit of Truth of Statements in Petition may nullify the proceedings as it was fatal.

(b)  Section 6(1) of Act 360 states that the Creditor’s Petition must be supported by an affidavit signed by a representative who has knowledge of the facts –

“Proceedings and order on creditor’s petition

6. (1) A creditor’s petition shall be verified by affidavit of the creditor or of some person on his behalf having knowledge of the facts, and shall be served personally to a debtor”

(c)  The manner required for the affidavit to be filed can be seen in Regulation of the Bankruptcy Rules 1969 under Act 360 (P.U. (A) 199/1969) –

“Verification

A creditor’s petition shall be verified by affidavit.

A petitioning creditor who cannot himself verify all the statements contained in his petition shall file an affidavit made by some person who can depose to them.”

(d)  The petition must be appended to Form No. 11, which is the required format for the verifying affidavit.

(e)  The introductory sentence of Form 11 is clear as follows:

“I, the petitioner named in the petition hereunto annexed, affirm (if the petitioner declare or affirm, alter the form accordingly) and say: 1. …

(f)    The Court took the view of Teoh Thean Peng v D & C- Leasing Sdn Bhd [1993] 2 CLJ 665 where The court ruled that even if the petition is not attached to the verifying document, the proceedings are still valid.

(g)  This is pertinent so long as the verifying affidavit, which shares the same title and identification number as the petition, sufficiently details the claims made in the petition.

(h)  This is also taken into account when Section 6(1) of Act 360 and Regulation 106 of (P.U. (A) 199/1969) are comparably phrased.

(i)     It is crucial to note that there is no express clause stating that the petition’s annexation to the confirming affidavit is required.

(j)     Accordingly, the Court held that the petition’s failure to be annexed there is only a formal error or irregularity in the verifying affidavit.

(k)   As a result, the insufficiency is curable in accordance with Rule 274 of the (P.U. (A) 199/1969) –

“Rule 274. Effect of non-compliance with Rules

Non-compliance with any of these Rules or with any rule of practice for the time being in force shall not render any proceeding void unless the Court shall so direct but such proceeding may be set aside either wholly or in part as irregular or amended or otherwise dealt with in such manner and upon such terms as the Court may think fit.”

(l)     Therefore, the Court further held that the failure to annexe the petition to the verifying affidavit does not render the bankruptcy proceedings null and void.

3.     The issue on the orders for substituted service valid for Appeal No. 85 :

(a)  The JD contended that there is a fault in the way of the originating motion as there is a violation of Rule 18 of (P.U. (A) 199/1969) as the applications were made by Notice of application rather than Summonses in Chambers.

“Applications and Practice

18. Applications to be made by summons in chambers

(1) Except where these Rules or the Act otherwise provide, every application to the Court shall, unless the Chief Justice otherwise directs, be made by summons in chambers supported by affidavit”

(b)  By using the aforementioned authorities, it is well-established that the term “shall” is obligatory and so imposes a duty to do what is necessary.

(c)  Given the circumstances, it is obvious that the JC violated a statutory rule by filing a notice of application rather than a summons in chambers.

(d)  Due to the incorrect approach taken by the JC, the application for substituted service itself is undermined, and any order issued as a result must be equally tainted and declared null and void.

Decision 1.    The Court of Appeal dismissed the Appeal No. 86 while allowing Appeal No. 85 with costs.
Key Take Away 1.      There are two ways for a person declared as a bankrupt:

(a)  By way of creditor’s petition, which is made pursuant to the commission of an act of bankruptcy simultaneously satisfying the requirements under Section 3(1) of the Insolvency Act 1967.

(b)   By way of debtor’s petition which the petition alone constitutes a bankruptcy act. The debtor files the petition to declare himself bankrupt in order to shield himself from the claims of his creditors, which he is aware he will not be able to pay.

2.      According to Section 3(1)(i) of Act 360, in the event that the debtor fails to comply with the requirement of the bankruptcy notice within 7 days after the service of the bankruptcy notice, the non-compliance of bankruptcy notice may deem the debtor in committing an act of bankruptcy.

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