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2014 MarsdenLR 2251
COURT OF APPEAL PUTRAJAYA
TETUAN SRI LING & ASSOCIATES – Appellant
Versus
LIAN MENG WAH – Respondent
[Civil Appeal No: W-03(IM)-1-01/2014]
An undischarged bankrupt must obtain prior consent from the Director General of Insolvency to maintain legal actions that do not constitute personal injury claims under Section 38(1)(a) of the Bankruptcy Act 1967.
Headnote:(A) Bankruptcy Act 1967 - Section 38(1)(a) - Legal competency of undischarged bankrupt to maintain proceedings - Appeal against reinstatement of default judgment - Court considered whether necessary consent from Director General of Insolvency required for legal actions by bankrupt. (Paras 9-10, 11-12, 27)
(B) Legal Principles - Court established that the definition of 'injury to his person' encompasses both physical and mental injuries, but clarified that claims relating to abuse of court process do not fit within the exception provided in Section 38(1)(a). (Paras 18, 23, 24)
(C) Findings of Court - The court found that LMW's claim arising from abuse of court process did not fall under the 'injury to person' exception in Section 38(1)(a), mandating the requirement for prior consent from the Director General of Insolvency. The appeal was allowed. (Paras 55-54)
Facts of the case:
This appeal was brought by the appellant against the reinstatement of a judgment in default obtained by LMW after the appellant failed to enter an appearance in a bankruptcy-related case. LMW sought damages for abuse of legal process, resulting from actions against him for the repayment of debt, which he claimed were wrongful. (Paras 1-6)
Findings of Court:
Court determined that LMW was incompetent to maintain the action without the prior approval necessary under Section 38(1)(a), resulting in the setting aside of the judgment in default. (Paras 54-55)
Issues: The key issues addressed by the court were the validity of the service of the writ and whether LMW required sanction to continue the action after adjudication as a bankrupt. (Paras 9-11)
Ratio Decidendi: The court reasoned that the allowance of such actions without sanction undermines bankruptcy provisions aimed at protecting creditors, reinforcing that the action for abuse of process is distinct from claims for personal injury. (Paras 12, 37, 55)
Result: Appeal allowed, orders of the learned Judge set aside, and orders of the learned Senior Assistant Registrar affirmed. (Paras 54-55)
| Table of Content |
|---|
| 1. summary of appeal origins and related decisions. (Para 1 , 2 , 3) |
| 2. background facts of lmw's appeal. (Para 4 , 5 , 6 , 7 , 8) |
| 3. consideration of lmw's competence to sue as bankrupt. (Para 10 , 11 , 12 , 14 , 18 , 19 , 24) |
| 4. legal competence of a bankrupt to pursue claims. (Para 13) |
| 5. interpretation of statutory requirements in bankrupt's claims. (Para 15 , 20 , 22) |
| 6. court's interpretation of the statutory requirements in bankrupt claims. (Para 27 , 28) |
| 7. assessment of procedural compliance in appeal. (Para 30 , 31 , 32 , 33 , 38 , 39) |
| 8. issues relating to assessment of damages. (Para 46 , 47 , 48 , 49 , 50 , 52) |
| 9. final decision on appeal and orders made. (Para 53) |
[1] This appeal arises from the decision of the learned Judge in the Court below delivered on 12 December 2013, allowing the first respondent's (LMW) appeal:-
a. to reinstate the judgment in default of appearance (the said judgment in default) obtained by LMW against the appellant (Encl 46B);
b. to assess damages in respect of the said judgment in default (Encl 48); and
c. to strike out the appellant's application to set aside the said judgment in default (Encl 53).
[2] LMW appeared in person in this appeal.
[3] The judgment of the learned Judge dated 30 August 2014 deals with two matters. The first matter deals with the application by LMW to impeach the adjudication order and the receiving order (the AO and RO) dated 22 July 2013 in a bankruptcy proceeding in respect of Kuala Lumpur High Court Bankruptcy No: 29-5767-10/2012 and the decision of the Selayang Sessions Court on 23 February 2013 in Summons No: 51- 18-2007. The second matter relates to LMW's notice of appeal to the Judge-in-Chambers in the instant action against the learned Senior Assistant Registrar's (SAR) decisions on Enclosures 46B, 48 and 53. This judgment will deal with the second matter of the judgment of the learned Judge only.
Background Facts
[4] The facts of the case that can be discerned from the judgment of the High Court and pleadings filed by both parties in this case reveal that LMW is an advocate and solicitor of the High Court of Malaya who at the material time worked with the appellant, a legal firm. On 24 December 2008, LMW commenced the instant action by filing a Writ of Summons together with the Statement of Claim against the appellant as the fourth defendant, Tetuan Shook Lin & Bok as the first defendant, Public Bank Berhad as the second defendant and Abdul Razak Hashim, a partner of the appellant, as the third defendant. What emerges from the statement of claim reveals that prior to the commencement of this action, the second defendant instituted legal proceedings against LMW for the repayment of credit facilities in the Klang Sessions Court vide Summons No: 52-847-2003 which was followed with foreclosure proceedings against LMW for the sale of land charged as security for the said credit facilities. As a result of these two actions by the second defendant, LMW had to sell the land in a forced sale for only RM180,000.00 being the forced value. The market value of the land LMW alleged, was RM470.000.00.
[5] On 22 January 2007, LMW instituted legal proceedings against the second defendant vide Kuala Lumpur Sessions Court Summons No: S4- 52-1959-2007 alleging negligent misrepresentation in the redemption statement issued to LMW for the purpose of the foreclosure proceedings by the second defendant which resulted in LMW suffering loss of RM290,000.00 when he was forced to sell the charged land for only RM180,000.00. Subsequently, LMW vide Kuala Lumpur High Court Civil Suit No: 22-202-2008, filed a second action against the second defendant and its solicitors namely Messrs. Soo Thien Ming & Nashrah for alleged abuse of process in connection with Summons No: S4-52- 1959-2007 and the bankruptcy proceedings filed against LMW by Messrs. Soo THien Ming & Nashrah on behalf of the second defendant. Following the second action by LMW, the second defendant retained the first defenda
