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2021 MarsdenLR 1507
HIGH COURT MALAYA SHAH ALAM
MOHD SOFI ABDUL GHAFAR – Appellant
Versus
KETUA PENGARAH INSOLVENSI & ANOR – Respondent
[Civil Suit No: BA-21NCVC-27-06/2020]
The court concluded that claims of misfeasance in public office may contain both public and private law elements, warranting trial even if weak.
Headnote:(A) Insolvency Act 1967 – Sections 33A, 33B, 60, 69, 74, 86, 92, 35 – Misfeasance in public office – Plaintiff alleged wrongful administration of bankruptcy estate post-discharge – Court held that actions of defendants were not legally ungrounded and could not be struck out as no reasonable cause of action was disclosed. (Paras [22], [39])
(B) Public law vs. private law elements – Misfeasance in public office holds mixed elements, allowing claims beyond judicial review processes. (Paras [26], [38])
Facts of the case: Plaintiff was discharged from bankruptcy but alleges misfeasance by the first defendant regarding creditor payments post-discharge. (Paras [1]-[9])
Findings of Court: Though the first defendant's power persists post-discharge, the plaintiff must prove misfeasance to succeed. (Paras [30], [39])
Issues: The key issue was whether the action disclosed a reasonable cause of action under the Insolvency Act. (Paras [26], [39])
Ratio Decidendi: The court emphasized a plaintiff's claim including misfeasance is complex needing trial, affirming that Merely weak claims do not warrant striking out. (Paras [39])
Result: Defendants' application to strike out the claim dismissed.
JUDGMENT
The Application
[1] Mohd Sofi bin Abdul Ghafar ("the plaintiff") has commenced this action against the Director General of Insolvency ("the first defendant") and Government of Malaysia ("the second defendant"). The plaintiff alleges that the first defendant has committed misfeasance in public office in relation to the administration of his estate in bankruptcy. The second defendant as the Government of Malaysia is said to be vicariously liable for the actions of the first defendant.
[2] The defendants have applied under O 18 r 19(1)(a), (b) and (d) of the Rules of 2012 to strike out the action.
Background Facts
[3] The plaintiff was adjudicated a bankrupt by the Shah Alam High Court, on 11 November 1998 and again by the Kuala Lumpur High Court on 16 March 1999. The first defendant was appointed to administer the plaintiff's estate in bankruptcy.
[4] A total number of 13 creditors duly filed their proof of debts, including Lembaga Hasil Dalam Negeri for a sum of RM277,913.08.
[5] Sometime in 2016, the plaintiff wrote to the first defendant asking to be discharged under s 33A of the Insolvency Act 1967 ("Insolvency Act") and received a favourable response from the latter.
[6] The first defendant then issued the relevant notices under s 33A of the Insolvency Act to all creditors who had filed proof of debts. Six objections were received. The first defendant rejected the objections of the said creditors by letter dated 2 July 2018. None of the creditors applied within 21 days to the High Court under s 33B(4) of the Insolvency Act to object to the issuance of the certificate of discharge.
[7] By a letter dated 23 November 2019, the first defendant informed the plaintiff that he had been discharged from bankruptcy pursuant to s 33A of the Insolvency Act and requested the payment of RM10 for the issuance of the certificate of discharge. This was paid by the plaintiff on 13 January 2020. The first defendant issued the certificate on 11 February 2020. The certificate of discharge stated that the plaintiff had been discharged as a bankrupt as at 30 November 2018.
[8] At the date of the plaintiff's discharge, the amount in his bankruptcy estate was the sum of RM1,673,712.20. The first defendant declined to release the monies to the plaintiff stating that he intended to utilise the monies to pay Lembaga Hasil Dalam Negeri the sum of RM76,211.52 to, and the balance ofRM1,597,501.08 to be paid pari passu to the 13 creditors including Lembaga Hasil Dalam Negeri.
[9] The plaintiff was dissatisfied and in June 2020, instituted this action against the defendants alleging that the first defendant has committed misfeasance in public office in administration of his estate in bankruptcy in two ways. First, by failing to pay the full sum of RM277,913.08 to Lembaga Hasil Dalam Negeri as a priority creditor. Second, by intending to make payment of the sum of RM1,395,799.42 to the 13 former creditors after the date on which his legal obligation to make payments has ceased. The plaintiff alleges that the first defendant knows that he has no power to do the acts complained of and that the acts will probably injure the plaintiff.
[10] The defendants responded by filing the present application to strike out the action.
Parties' Submissions
Case For The Defendants
[11] In support of the application to strike out the proceedings, the defendants contend that the statement of claim does not disclose a reasonable cause of action in view of ss 60, 69 and 74 of the Insolvency Act.
[12] The defendants argue that the plaintiff's complaints (at para [9]),which form the crux of the plaintiff's case, are without any legal basis. The defendants submit that the first defendant is factually and legally both entitled and empowered to do the acts complained of under ss 60 and 69 of the Insolvency Act. They argue that it is the duty of the first defendant, notwithstanding the plaintiff's discharge to continue to administer his bankruptcy estate until all his c
