RK Nathan J:

Facts

The plaintiff is an advocate and solicitor and was at all material times the sole proprietor of his legal firm. The plaintiff's firm prepared a facilities agreement for the 1st defendant for which a bill dated 4 August 1986 for the sum of RM15,000 was delivered to the 1st defendant. The plaintiff's firm also prepared a loan agreement for the 1st defendant's holding company MBf Holdings for which a bill for RM31,250 was delivered to MBf Holdings. The two bills were not denied and/or disputed; neither did the 1st defendant or MBf Holdings pay the plaintiff on his said bills.

The plaintiff was a holder of a credit card from the 1st defendant and as at 29 March 1988 there was a sum of RM7,519.44 due on the credit card. To the 1st defendant's previous solicitors' notice of demand dated 29 March 1988 claiming the sum of RM7,519.44 the plaintiff by his letter dated 6 April 1988 referred to his said unpaid bills and denied owing the 1st defendant the sum of RM7,519.44. The plaintiff further demanded payment on his bills which far exceeded the sum of RM7,519.44. The 1st defendant again did not dispute the plaintiff's claim or reply to the plaintiff's letter. The plaintiff, at the request of the 1st defendant's previous solicitors, again forwarded the bill with a letter dated 26 May 1988. There was no reply to this letter too. The 1st defendant, however, without serving the Kuala Lumpur Magistrate's Court Summons No. 82-4065-88 (the summons) on the plaintiff, proceeded to obtain judgment in default of appearance for the sum of RM7,519.44. Although the fact that the plaintiff was represented by solicitors was known to the 1st defendant's previous solicitors, no notice was given to the plaintiff under r. 56 of the Legal Profession (Practice and Etiquette) Rules 1978. The summons was issued on 23 April 1988 and judgment in default of appearance (the default judgment) was obtained on 28 June 1988.

Having obtained the default judgment the 1st defendant withheld execution proceedings for about four and a half years until it commenced bankruptcy proceedings against the plaintiff on 1 December 1992. No explanation was offered for withholding execution proceedings. The 2nd defendant, the solicitors for the 1st defendant, received instructions from the 1st defendant along with a copy of the judgment, all other relevant documents, demand letters and cause papers, to institute bankruptcy proceedings against the plaintiff. The defendants continued with bankruptcy proceedings up to the point of publishing the issuance of creditor's petition, in The Star newspaper.

On reading the advertisement of the creditor's petition in the local newspaper, the plaintiff applied to set aside the service of the summons. On a preliminary issue that the summons was never served on the plaintiff, the learned Magistrate set aside the service of the summons on 22 August 1995. Consequently, the judgment in default was also set aside. The 1st defendant did not appeal against the decision of the learned Magistrate. Neither did the 1st defendant commence a fresh action against the plaintiff. It must be noted that the creditor's petition was also posted on the notice board of the High Court at Kuala Lumpur. The plaintiff successfully set aside the service of the bankruptcy notice and had the creditor's petition struck out on 16 November 1995.

The Plaintiff's Claim

The plaintiff's claim is for damages for civil malicious prosecution arising out of the bankruptcy proceedings, and for abuse of process.

Findings Of The Court

(A) Civil Malicious Prosecution

With regard to the claim for civil malicious prosecution the plaintiff has to satisfy the court on the following issues.

1. Did The Defendants Have A Right To Institute Bankruptcy Proceedings?

The foundation of the action lies in abuse of the process of the Court by wrongfully setting the law in motion and it is designed to discourage the perversion of the machinery of justice for an improper purpose