A creditor must prove exhaustion of all recovery avenues against the principal debtor before initiating bankruptcy proceedings against a guarantor, ensuring protection for guarantors.

JUDGMENT

Wong Siong Tung J:

Introduction

[1] Goh Kiang Ann (JD) is one of the three (3) guarantors for the principal borrower, Episo Enterprise Sdn Bhd (Episo) in respect of two (2) Term Loan Facilities granted by OCBC Bank (Malaysia) Berhad (JC) to Episo.

[2] Due the default of Episo in the repayment of the term loans to the JC, the JC commenced action in Suit No. MYY-22NGC-1/7-2022 in the High Court , Miri and obtained judgment against all the three (3) guarantors, including the JD for the sum of RM17,802,031.36 as at 30 June 2022 with the prescribed interest in respect of the first Term Loan Facility and the sum of RM246,838.18 as at 30 June 2022 with the prescribed interest in respect of the second Term Loan Facility and costs on solicitor and client basis.

[3] The JC took up an application by Summons In Chambers dated 24 August 2023 (Enclosure 3) for leave under s 5(3)(b) of the Insolvency Act, 1967 to commence bankruptcy action against the JD for non payment of the judgment debt. The application was opposed by the JD.

[4] On 18 March 2024, the learned Senior Assistant Registrar allowed the JC's application and granted JC leave to commence bankruptcy action against the JD.

[5] Dissatisfied with the decision of the learned Senior Assistant Registrar, the JD appealed to the Judge of the High Court in Chambers under O 56 r 1 of the Rules of 2012 (Enclosure 42).

The Affidavits And The Core Issues

[6] There are four affidavits affirmed by Tong Mei Hsien on behalf of JC and three affidavits affirmed by JC himself for the hearing of the application. These affidavits contain substantial argument mixed with factual materials, making them unnecessarily lengthy and time-consuming to read. It should be reminded that affidavits should primarily serve to present evidential facts, not to include arguments or submissions on behalf of the parties.

See: Courts Mammoth Bhd v. Subramaniam Paramasivam ; 2007 MarsdenLR 2861 ; [2007] 3 CLJ 59; Yamamori (Hong Kong) Ltd v. Davidson & Ors; [1992] 2 MLJ 410 and Re Application By Dow Jones (Asia) Inc; [1988] 1 MLJ 222.

[7] Despite the lengthy and extensive affidavits filed and written submissions, the disputes can be distilled into two core issues as follows:

(a). Whether the Affidavits affirmed by Tong Mei Hsien are admissible for failure of proof that she is duly authorised by the JC; and

(b). Whether the JC has exhausted all modes of execution and enforcement to recover debts owed by the Principal Debtor/Borrower

Issue: Whether The Affidavits Affirmed By Tong Mei Hsien Are Admissible For Failure Of Proof That She Is Duly Authorised By The JC

[8] In summary, learned counsel for the JD submitted that the affidavits of Tong Mei Hsien (the said Deponent), filed in support of the JC's application for leave under s 55(3)(b) of the Insolvency Act 1967, are inadmissible due to the absence of proof of authorization, relying on s 133(a) of the Insolvency Act 1967 and r 215 of the Insolvency Rules 2017 .

[9] The learned counsel for the JD submitted that r 215 of the Insolvency Rules 2017 and s 133 of the Insolvency Act 1967 do not apply to the current JC's application for leave. He also submitted that the said Deponent stated in the JC's Affidavits that she is the Head of Special Asset Management and has been appointed as the JC's attorney (paragraph 6(a) of Enclosure 7), authorized to make affidavits on JC's behalf. There is no credible evidence challenging her authority, and thus, her authority remains valid. He submitted, furthermore, there is no requirement for the said Deponent to present evidence of authority to make an affidavit before the Court .

[10] Section 133 (a) of the Insolvency Act 1967 so far as relevant, provides:

133. Acts of corporations, firms and mentally disordered persons

For all or any of the purposes of this Act-

(a) a corporation may act by any of its officers authorized in that behalf under the seal of the corporation;

(b) ....

[Emphasis Added]

[11] Rule 215 of the Insolvency Rules 2017 pro