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2022 MarsdenLR 226
HIGH COURT MALAYA SHAH ALAM
LEE KAM YOONG – Appellant
Versus
BANK KERJASAMA RAKYAT MALAYSIA BERHAD & ANOR – Respondent
[Originating Summons No: BA-24NCvC-780-07/2021]
An undischarged bankrupt cannot unilaterally sell a charged property without the Director of Insolvency's sanction, and a valid Order for Sale by public auction cannot be set aside through separate applications.
Headnote:(A) Insolvency Act 1967 – Sections 38, 41, 52, 53B, 53C, 91; National Land Code 1965 – Sections 256, 257 – An undischarged bankrupt applied to sell his half interest in a charged property through private treaty despite a valid Order for Sale by public auction. The court held that the order could not be set aside without valid grounds, and further concluded the application was void. The applicant lacked necessary sanction from the Director of Insolvency since all financial dealings must be approved by the Director. (Paras 11, 18, 21, 29, 37)
(B)
Order for Sale – A valid Order for Sale cannot be challenged in a separate application unless due process is followed to set it aside. (Paras 22, 37)
(C)
Rights of an Undischarged Bankrupt – An undischarged bankrupt's rights are limited by the Insolvency Act, and disputes involving such cases must be referred to the Winding Up/Bankruptcy Court. (Paras 18, 36)
JUDGMENT
Introduction
[1] The Applicant, an undischarged bankrupt, is a co-owner of the Property, with his wife holding the other ½ part of the Property. They executed a charge over the Property in favour of the First Respondent's bank. They defaulted on the charge. The First Respondent commenced foreclosure proceedings. The Respondent obtained an order for sale. The Property was about to be auctioned. The Applicant filed an Originating Summons to seek relief from the Court pertaining to the Property. The Applicant intends to sell the Property through a private treaty to obtain a higher purchase price to pay off his debt. Should the Order for Sale be set aside to allow for the private treaty?
[2] I heard the application. Based on the cause papers and parties' submissions, I dismissed the Applicant's Amended Originating Summons dated 28 September 2021 with costs.
Background Facts
[3] Applicant Lee Kam Yoong and his wife, Liew Yoke Lin are the registered owners of a double-story semi-detached house held under Hakmilik PN 6531 Lot 56 Seksyen 5 Bandar Petaling Jaya ("Property"). Applicant and his wife hold 1/2 share of the Property respectively.
[4] First Respondent Bank Kerjasama Rakyat Malaysia Berhad provided a loan facility to the Applicant for an amount of RM 960,000.00 which has been charged to the First Respondent vide Gadaian Perserahan No: 20579/1996 dated 8 May 1996.
[5] The Applicant and his wife defaulted on the charge when failed to make repayment under the loan facility. The First Respondent has issued a Notice in Form 16D to the Applicant and his wife with regard to the breach of the charge.
[6] Subsequently, First Respondent obtained an Order for Sale at the Shah Alam High Court vide Originating Summons No: BA-24MFC-210-04/2019 to auction off the Property to which the Order for Sale has been granted by the Shah Alam High Court on 9 December 2019.
[7] The Applicant then filed an Amended Originating Summons (OS) dated 28 September 2021 to seek the following reliefs:
i) Pemohon diberi keizinan dan kebenaran untuk menjual ½ bahagian hartanah tersebut kepada pihak ketiga dengan harga sebanyak RM 750,000.00;
ii) Kesemua daripada hasil jualan ½ bahagian tersebut dibayar kepada Responden Pertama untuk memenuhi liabiliti Pemohon kepada Responden Pertama;
iii) Timbalan Pendaftar/Penolong Kanan Pendaftar diberikan keizinan dan kebebasan untuk menandatangani semua dokumen-dokumen dan instrumen yang perlu bagi penyempurnan penjualan tersebut; dan
iv) Apa-apa relif tambahan dan/atau lanjut sebagaimana ia adalah difikir wajar dan suaimunafaat oleh Mahkamah yang mulia ini.
[8] The Applicant filed Amended OS before this High Court on the basis that High Court has discretionary powers to sanction and review, including the power to allow the envisaged sale by the Applicant. The provisions of the Insolvency Act relied upon by the Applicant are subsections 38(1)(a), 38(1)(ba), ss 41, 51, 52, 53B, 53C, 54 and 91. The Applicant reckons that he is incompetent to maintain any action without previous sanction of the Director of Insolvency (DGI) and any financial dealing has to be approved by the DGI.
Preliminary Objections
[9] First Respondent raised the following preliminary objections against the Amended Originating Summons filed by the Applicant:
i) Parties to the Application
Parties to this Application should be both the Applicant and his wife as they are co-owners and the charge is over the whole Property. It is not possible just to apply half of the Property for sale. The application should be made by both owners.
Further, no evidence to support that a 3rd party agrees to purchase the Property. Therefore, it is a bare assertion by Applicant to delay the auction.
As the whole Property has been charged to the First Respondent, First Respondent has rights over the Property that exceeds the rights of the owners. As a registered chargor, the First Respondent has a right to sell the whole Property.
ii) Order for Sale and Public Auction
An Ord
