Low Hop Bing JCA:

Appeals

[1] The appellant-defendant ("the bank") has filed two related appeals against two separate decisions of the learned judge of the Kuala Lumpur High Court. These appeals are:

Appeal No Decision Appealed Against

(1) W-02-586-08 The bank's application, which sought to set aside the judgment dated 27 July 2007 given for the respondent- plaintiff ("the customer"), was dismissed with costs.

(2) W-02-722-07 Judgment with costs was given for the customer on 27 July 2007.

[2] By consent of the parties, Appeal No (1) was heard first, as the outcome thereof would have a direct bearing on Appeal No (2).

[3] On 20 February 2009, we allowed these two appeals with costs, set aside the judgment given for the customer and ordered the deposits to be refunded to the bank. We now give our grounds.

Factual Background

[4] The customer was the sole proprietor of Omar Khayam Enterprise.

[5] The bank had granted banking facilities to the customer.

[6] On 4 March 1999, by way of a writ action vide Kuala Lumpur High Court Civil Suit No. 2-22-155-1999, the customer sought to recover a sum of RM233,155 with interest, on the basis of the bank's negligence and/or breach of contract.

[8] On 29 November 2004, a month after the trial started, the customer filed his statement of affairs with the official assignee (OA), now re-designated as the Director General of Insolvency. (For convenience, we shall refer to these two designations interchangeably). Undoubtedly, the customer has full knowledge of his bankruptcy when he proceeded to instruct his solicitors to actively and vigorously pursue all proceedings and to prosecute the trial in the High Court.

[9] On 13 October 2006, the customer instructed his solicitors to apply for an order of annulment of his bankruptcy on the ground that he had settled all outstanding sums due and owing to his creditors. An order for annulment was granted on 19 October 2006 ("the annulment order").

[10] During the customer's bankruptcy period, he had not obtained the OA's previous sanction to pursue the proceedings and prosecute the trial in the High Court. In fact, the OA vide letter dated 29 August 2007 categorically clarified that his office was not aware of the customer's action in the High Court.

[11] On 27 July 2007, the learned High Court judge gave judgment for the customer.

Is The Bankrupt Competent To Maintain His Action?

[12] Learned counsel Mr. Ben Chan (assisted by Mr B H Yap and Ms Caryn Wong) submitted for the bank that during the customer's bankruptcy period, the customer was incompetent to maintain his action in the High Court without the previous sanction of the OA, in view of s. 38(1)(a) of the Bankruptcy Act 1967 . (A reference hereinafter to a section is a reference to that section in the Bankruptcy Act 1967 ("the Act") unless otherwise stated).

[13] Mr. George Proctor, the customer's learned counsel, contended that at the time of filing the action on 4 March 1999, the customer was not a bankrupt and, notwithstanding the customer's bankruptcy period, the customer was competent to maintain the proceedings and prosecute the trial in the High Court, o