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2021 MarsdenLR 1992
HIGH COURT SABAH & SARAWAK KOTA KINABALU
JIVOL @ EDMUND DOUDILIM – Appellant
Versus
THE DIRECTOR GENERAL OF INSOLVENCY MALAYSIA – Respondent
[Originating Summons No: BKI-24NCvC-85/9-2020]
A conditional discharge from bankruptcy requires full compliance with its terms; failure to meet these terms negates any claim of being non-bankrupt.
Headnote:(A) Insolvency Act 1967 – Sections 33(10) and 91(1) – Conditional discharge of bankruptcy – Plaintiff sought to declare he is not a bankrupt despite being conditionally discharged with unpaid debts. The court emphasized that the conditional discharge must be fully satisfied to claim status as discharged. (Paras 4, 33, 36)
(B) Bankruptcy Rules 1969 – Rule 201 – Application procedure – Plaintiff's application was deemed irregular for failure to invoke relevant law in the intitulement. (Paras 13, 15)
Facts of the case: Plaintiff was adjudged bankrupt in 2005, conditionally discharged in 2013 with ongoing payment obligations. He failed to submit financial statements or comply with payment conditions.
Findings of Court: Dismissed the application citing jurisdiction issues and non-compliance with conditional discharge terms.
Issues: Compliance with bankruptcy discharge conditions; proper jurisdiction for the application; validity of bankruptcy search results.
Ratio Decidendi: The plaintiff's conditional discharge requires full compliance; the proper court for such applications is the Bankruptcy Court. Failure to comply invalidates the claimed discharge.
Result: Application dismissed; liberty granted to file afresh in the Bankruptcy Court.
Key Points: - (!) The proper Court to hear matters arising from conditional discharge is the Bankruptcy Court under its bankruptcy jurisdiction. - (!) The application should be initiated in the Bankruptcy Court under the Insolvency Act and Bankruptcy Rules; the current OS was held irregular for lacking proper jurisdiction. - (!) The conditional discharge under s 33(10) may be subject to conditions and ongoing duties, including reporting obligations and ongoing payments; non-compliance affects the validity of the discharge. - (!) The Court considers DGI reports when deciding to grant or suspend discharge with conditions. - (!) The discharge order in this case included a condition to consent to judgment for the remaining debt and monthly payments. - (!) Non-payment of the monthly instalment and failure to comply with reporting/after-acquired property obligations support continuing restrictions under the conditional discharge. - (!) The application was dismissed for lack of proper jurisdiction; plaintiff may refile in the Bankruptcy Court.
What is the proper forum and jurisdiction for seeking a declaration of non-bankruptcy after a conditional discharge?
What is required to validly commence a bankruptcy discharge-related application under Malaysian insolvency law?
What are the consequences of non-compliance with a conditional discharge order under s 33(10) of the Insolvency Act 1967?
[1] This is an application by the plaintiff for a declaration that he is not a bankrupt as at 12 September 2020. The orders sought are as follows:
(a) A declaration that the plaintiff is not a bankrupt as at 12 September 2020 and that the bankruptcy search certificate issued by the DGI/ defendant dated 2 September 2020 remains valid on 12 September 2020 and 25 September 2020;
(b) A declaration that the bankruptcy search certificate issued by the defendant dated 12 September 2020 and 25 September 2020 are null and void;
(c) A declaration that the defendant rectify all the records of the plaintiff so as to show that the plaintiff is no longer a bankrupt after 23 August 2013 as regards Bankruptcy Matter K29-469- 2003;
(d) That the cost of this application be borne by the defendant; and
(e) Any further or other relief as the Court deems fit to grant.
Brief Factual Background
[2] The plaintiff was adjudged bankrupt on 17 February 2005 pursuant to the Creditor's Petition filed by Alliance Bank Malaysia Berhad.
[3] Based on the Court Order dated 23 August 2013 (hereinafter referred to as "the said Order"), the plaintiff is discharged by the Court on the following conditions:
"He shall consent to the judgment being entered against him by the Director General of Insolvency for the sum of RM363,281.17 being the balance of the debts provable under the bankruptcy which is not satisfied at the date of this Order... He shall continue to pay RM300.00 per month to the Director General of Insolvency until the full settlement of the sum of RM363,281.17."
[4] The plaintiff's discharge was made pursuant to s 33(10) of the Insolvency Act 1967 , hence the plaintiff's discharge is conditional and he still has to report to the DGI any information whatsoever pertaining to his properties, in addition to the monthly payment that he has to make as mandated in the said Order.
[5] From 17 February 2015 to date, the plaintiff has only submitted his financial statements to the DGI for the period of January 2008 until the month of June of the same year. No financial statement was filed by the plaintiff after that period.
[6] It is pertinent to note that from 23 August 2013 onwards, the plaintiff also fails to pay the monthly instalment to the DGI, hence disobeying the said Order. To date, the plaintiff has not paid the full settlement of the sum of RM363,281.77 as clearly stipulated in the Order.
[7] Despite the above circumstances, according to the plaintiff, in seeking to contest the Sabah State Election for the State Constituency (DUN) of N 23 Petagas, he had submitted his nomination papers to the Returning Officer ("RO") during the nomination day but 'only to be known later' that he was not eligible to contest due to his bankruptcy status.
Issues
[8] The issues of the present case are stated as follows:
(a) Failure to refer any provision of law in the intitulement;
(b) Whether the application is properly made;
(c) The effect of the Conditional Order of Discharge dated 23 August 2013;
(d) The effect of the plaintiff's non-compliance of the Conditional Order of Discharge dated 23 August 2013; and
(e) Whether bankruptcy search result is conclusive as to a bankrupt's discharge status.
Contention Of The Parties
[9] The plaintiff contends that the plaintiff has been discharged from bankruptcy with conditions under s 33(10) of the said Act by the Court on 23 August 2013 and it was gazetted in the newspapers on 1 June 2016.
[10] Pursuant to r 201 of the Bankruptcy Rules 1969 which states that :
"(1) An application by the Official Assignee for leave to issue execution on a judgment under sub-section (10) of s 33 shall be in writing and shall state shortly the grounds on which the application is made. When the application is lodged the Court shall fix a day for the hearing.
(2) The Official Assignee shall give notice of the application to the debtor not less than eight days before the day appointed for the hearing and shall at the same time furnish him with a
