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2013 MarsdenLR 2120
COURT OF APPEAL, PUTRAJAYA
NG YEN KOK – Appellant
Versus
AMFINANCE BERHAD – Respondent
[Civil Appeal No: M-03-247-2009]
The court ruled that invalid service of the Bankruptcy Notice and a significant delay in filing the creditor's petition invalidated bankruptcy proceedings against the debtor.
Headnote:(A) Bankruptcy Act 1967 - Sections 3(1)(i) and 5(1)(c) - Bankruptcy proceedings - Service of Bankruptcy Notice - Substituted service requirements - Appellant argued non-receipt of proceedings due to absence abroad - Court found service not duly conducted as notice sent to incorrect address - Appeal raised issues of deficient service of Bankruptcy Notice and undue delay in presenting the creditor's petition - Court concluded that improper service nullifies the act of bankruptcy; the delay of 20 months between the act and the petition barred validity. (Paras 13, 19, 27, 29, 31, 39)
Findings of Court:
Bankruptcy Notice not validly served, therefore appellant did not commit an act of bankruptcy; creditor's petition invalid due to delay.
Issues: 1) Whether Bankruptcy Notice was duly served; 2) Whether delay in presenting creditor's petition affected its validity.
Ratio Decidendi: Proper service is prerequisite for establishing an act of bankruptcy under the Bankruptcy Act; failure to serve validly precludes the pursuit of bankruptcy actions.
Result: Appeal allowed, receiving order and adjudication order are set aside.
| Table of Content |
|---|
| 1. background of bankruptcy proceedings (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11) |
| 2. identification of key issues in the case (Para 12 , 13 , 14) |
| 3. service of bankruptcy notice and implications (Para 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27) |
| 4. determination of validity of creditor's petition. (Para 28) |
| 5. validity of creditor's petition based on delay (Para 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37) |
[1] On 12 December 1998 the respondent (judgment creditor) obtained judgment against the appellant (judgment debtor) for the sum of RM534,929.16. The judgment was obtained in default of appearance by the appellant. The writ of summons and statement of claim had been served upon him by way of substituted service.
[2] The judgment sum was the outstanding amount due under a hire purchase agreement entered into by one Mega-Intech Sdn Bhd with the respondent. The appellant was one of three persons who entered into an indemnity agreement ("Indemnity Agreement") dated 23 March 1996 in respect of the hire purchase agreement.
[3] Based on the judgment of 12 December 1998, and upon the judgment sum remaining unpaid, the respondent commenced bankruptcy proceedings against the appellant. A Bankruptcy Notice was issued on 28 November 2002.
[4] According to para 4 of the creditor's petition, the Bankruptcy Notice was served on the appellant on 21 August 2003 by way of substituted service. However, no order for such substituted service was exhibited in the Appeal Record. The only document in the Appeal Record which relates to the service of the Bankruptcy Notice is a "surat akuan mengepos" (acknowledgement of posting), the date of which is not discernible, addressed to the appellant at 428C Lorong Mawar, Bukit Baru, 75150 Melaka.
[5] On 9 May 2005, some 20 months after the purported service of the Bankruptcy Notice, the creditor's petition was filed by the respondent.
[6] The creditor's petition was also not able to be personally served on the appellant and an order for substituted service was obtained.
[7] One JB Buddilal a/l Dharmadasa affirmed an affidavit stating that the creditor's petition was duly served in accordance with the order for substituted service, including the posting of the petition at the appellant's premises at 4286C, Lorong Mawar, Bukit Baru, 75150 Melaka on 17 January 2007.
[8] A receiving order and an adjudication order ("RO & AO") were simultaneously granted on 1 November 2007.
[9] On 12 January 2009 the appellant filed summons in chambers applying for a stay of the RO & AO or alternatively to have the RO & AO set aside, on the principal ground that he had been out of the country between 2001 and 2004 and had been working in Abu Dhabi since 2004 and thus did not receive any correspondence with regard to the bankruptcy proceedings and had no knowledge of them or of the RO & AO.
[10] The appellant's application was dismissed. He appealed to the judge in chambers and the appeal was also dismissed.
[11] He then appealed to the Court of Appeal against the dismissal of his appeal to the judge in chambers.
[12] We heard the appeal on 26 March 2012 and allowed the appeal. Our reasons for so doing are set out below.
[13] Having examined the documents in the Record of Appeal and having read and heard the submissions of both parties, we are satisfied that the main issue in this case is whether the bankruptcy proceedings in this case are defective as the Bankruptcy Notice was not duly served on the appellant ("Issue of service of Bankruptcy Notice").
[14] We are also troubled by the delay of 20 months between the date the act of bankruptcy allegedly occurred and the presentation of the creditor's petition. We note that this is not a ground forwarded by the appellant in his memorandum of appeal. However, we believe that we have the discretion to consider that matter based on subrule 18(2) of the Rules of the Court of Appeal 1994. We also believe that as that delay raises an issue of law
