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2017 MarsdenLR 459

FEDERAL COURT PUTRAJAYA
WESTECH SDN BHD – Appellant
Versus
THONG WENG LOCK – Respondent
[Civil Appeal No: 03(i)-4-10-2015(B)]



The act of bankruptcy is deferred until the dismissal of an application to set aside a bankruptcy notice by the registrar, not contingent upon ongoing appeals.

Headnote:This judgment involves an appeal concerning bankruptcy proceedings initiated by the appellant against the respondent. Under the Bankruptcy Act 1967, acts of bankruptcy are defined, leading to the court's findings on statutory compliance for filing creditor's petitions. The court primarily determined the timing of the act of bankruptcy and whether statutory constraints were observed. The pivotal issues revolved around the interpretation of rules concerning bankruptcy notice applications and the responsibility of filing within stipulated timelines. The court concluded the act of bankruptcy was deferred, allowing the creditor's petition to adhere to statutory requirements. The appellate court allowed the appeal with costs.

Table of Content
1. summary of bankruptcy proceedings initiation and timelines. (Para 1 , 2 , 3 , 4 , 5 , 12 , 14)
2. understanding the procedural timing for bankruptcy notice applications in relation to acts of bankruptcy. (Para 8 , 10 , 17)
3. court observations on the deferral of the act of bankruptcy. (Para 18 , 19)
4. determining the implications of appeals on the timeline for acts of bankruptcy. (Para 20 , 28)
5. arguments regarding the correct interpretation of the bankruptcy timelines. (Para 23 , 24 , 29 , 30)

[1] This appeal arose pursuant from a bankruptcy proceedings commenced by the judgment creditor (the appellant) against the judgment debtor (the respondent). The appellant had served a bankruptcy notice (BN) on the respondent on 24 October 2011.

[2] Under s 3(1)(i) of the Bankruptcy Act 1967 (BA), an act of bankruptcy is committed upon the expiry of seven days from the date of service of the BN. In this case, on the premise that no legal impediment exists, the act of bankruptcy begins from 1 November 2011. Any creditor's petition (CP) to be filed, must be done within six months of the latter date (s 5(1)(c) of the BA).

[3] To strike out or stay the BN, the respondent filed a summons in chambers (the impugned BN application) on 31 October 2011, one day before the act of bankruptcy took effect. The words used in the application were 'dibatalkan atau digantungkan'. The respondent submitted that his application was pursuant to r 18 of the Bankruptcy Rules 1969 (BR).

[4] Rule 18(1) of the BR requires applications to be made by Summons in Chambers (SIC), and unless the Chief Justice provides otherwise, the SIC must be supported by an affidavit. The impugned BN application did indicate that the affidavit dated 31 October 2011 of one Thong Weng Lock was attached to it, as evinced in the Core Bundle of the respondent. Premised on this affidavit, the appellant submitted that the impugned application was pursuant to r 95 of the BR.

[5] Six grounds were supplied by the respondent as to why the BN could be struck out, inter alia, that he had a set-off, counterclaim or cross-claim against the appellant (see para 4.6 of the affidavit).

[6] The Senior Assistant Registrar (the Registrar) on 13 April 2012 dismissed the BN application except for the stay. This stay order later lapsed. Being dissatisfied with the dismissal, the respondent filed an appeal to the Judge in Chambers.

[7] Before the appeal was heard by a Judge in Chambers, the appellant filed a CP on 27 August 2012.

[8] As said above, the BA provides that any CP must be filed within six months from the date the act of bankruptcy is committed. For purposes of this case, as said above, without any legal impediment being present, the filing date of the CP ought to be on or before 1 May 2012 ie the very position taken up by the respondent. In this case, the CP was filed on 27 August 2012, clearly about three months outside the last allowable statutory period, as submitted by the respondent. The appellant justified the 'delay' on the ground that the act of bankruptcy had been deferred.

[9] The respondent in order to show cause against the CP, must file a notice with the Registrar, specifying the statements in the CP which he intends to deny or dispute (r 117 of the BR). This the respondent did on 26 September 2012.

[10] A day later, ie on 27 September 2012, the respondent filed a simple notice of application (NOA) rather than by SIC to strike out or stay the CP (dibatalkan atau digantungkan), a mode of application that again did not comply with r 18 of the BR.

[11] On 17 April 2013, the Registrar dismissed the striking out and stay application of the CP by the respondent. On the same day, the Registrar proceeded to grant a Receiving Order (RO) and an Adjudicating Order (AO) as prayed for in the CP.

[12] The respondent then filed an appeal to the Judge in Chambers on 23 April 2013, inter alia, against the RO and AO.

[13] The appeal pertaining to the BN application, which was ventilated in t

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