Question 2

On 21.1.2018, Richbank Bhd. (RB) obtained summary judgment against Allen in the Kuala
Lumpur High Court for a sum of RM600,000 together with interest at 8% per annum from
the date of judgment to date of realisation as well as costs of RM1,600. Allen immediately
filed an appeal to the Court of Appeal.
On 12.2.2018, RB filed and served a bankruptcy notice on Allen’s Solicitors. The notice
contained a demand for the judgment sum of RM600,000 together with interest and costs.
On 25.2.2018, Allen filed a summons in chambers supported by affidavit to set aside the
bankruptcy notice on the following grounds:-
(i) the summary judgment is not a final judgment as per s. 3(1) Insolvency Act 1967,
(ii) Uncertainty or ambiguity in the bankruptcy notice since the amount stated to be payable
is not quantified,
(iii) The bankruptcy notice was not served personally on Allen,
(iv) Allen has a counter claim against RB for the sum of RM400,000.
The SAR of the HC dismissed Allen’s application
Allen now seeks your advice on the viability of an appeal against the decision of the SAR to
the Judge in Chambers based on the same grounds. Advise Allen.

Issue 1
The issue in this case was whether the summary judgment filed by Richbank Bhd
(RB) against Allen was not a final judgment as per Section 3(1) of the Insolvency Act 1967.
Bankruptcy notice’ is a notice issued by the court requiring a debtor to pay a specified
sum of money or to secure or compound for it to the satisfaction of the creditor or the court
within a prescribed period. Non-compliance with the notice by the debtor gives rise to an act
of bankruptcy under Section 3(1)(i) of Insolvency Act, unless the debtor can satisfy the court
that the debt has been settled, or that he has a counterclaim, set-off or cross-demand which
equals or exceeds the amount demanded. There are certain grounds on how the Bankruptcy
Notice may be challenged by the Debtor.
Bankruptcy Notice can only be served when final judgment is obtained. The purpose
behind this is to protect the rights of the debtor as it finally disposes the rights of the parties.
When bankruptcy notice was served when application is still in hearing or when appeal was
made by within stipulated time, the bankruptcy notice is deemed to be invalid. However, if
the appeal to set aside the judgment in default was not made by debtor within 30 days, the
judgment will be crystallised into final judgment as affirmed in the case of Re Udos ak
Rigging.
We can see in the case of Re Udos ak Rigging exp Seabanc Kredit S/B. The issue in
this case was whether the judgment in default is a final judgment whilst there was an appeal
pending before the Judge against the Magistrate’s decision. The court held that a default
judgement is not final because it is not decided by merits. Therefore, judgement that is not
given based on merit is applicable to be set aside by application from the debtor.
Besides that, we can also see in the case of Lee Bak Soon v RHB Bank Berhad
where the court held that summary judgment was a final judgment as stipulated under Order
14A of the Rules of Court 2012. According to Order 14 ROC, summary judgment was
obtained when defendant has entered into appearance and the defendant has no defence
towards the case. Therefore, it is said that summary judgment was a good judgment as there
was merit in the case. We can also look into the case of Sri Jeluda Sdn Bhd v Pentalink
Sdn Bhd where the plaintiff has obtained summary judgment against the defendant.
Defendant then appealed. Meanwhile, the Plaintiff issued a bankruptcy notice against
Defendant. Defendant applied to set aside the bankruptcy notice on the ground that it was
pending appeal as the debt was in dispute. The court held that that summary judgment
remained a good judgment until it has been set aside on appeal.
Furthermore, the court in the case of Re Lim Chan Kwang, ex parte Public Bank
Bhd held that the ex parte judgment given in an application for summary judgment became a
judgment given on merits after the judge in chambers allowed the appeal against the deputy
registrar's decision and ordered judgment to be entered against the debtor. Thus, the High
Court judgment was a final judgment accordance to the law.
In the instant case, RB obtained summary judgment against Allen on 21.1.2018 in the
Kuala Lumpur High Court for a sum of RM600,000 together with interest at 8% per annum
from the date of judgment to date of realisation as well as costs of RM1,600. Allen
immediately filed an appeal to the Court of Appeal. As stated in the case of Re Udos ak
Rigging, a judgment will become a final judgment if the judgment debtor did not apply to set
aside the judgment within 30 days. In our case, Allen had only filed the summons in
chambers supported by affidavit to set aside the bankruptcy notice on 25.2.2018 which had
already over the stipulated time given under the law.
Besides that, by applying the case of Lee Bak Soon v RHB Bank Berhad, Sri
Jeluda Sdn Bhd v Pentalink Sdn Bhd and Re Lim Chan Kwang, ex parte Public Bank
Bhd, the summary judgment filed by RB against Allen was said to be a good and final
judgment as stated under the case given. Therefore, Allen cannot set aside the summary
judgment on the basis that the summary judgment filed by RB was not a final judgment as
per Section 3(1) Insolvency Act 1967.
In conclusion, the summary judgment filed by Richbank Bhd (RB) against Allen was
a final judgment as per Section 3(1) of the Insolvency Act 1967. Allen is unable to set aside
the summary judgment on the ground that the summary judgment was not a final judgment.
Issue 2
The second issue was whether there is uncertainty or ambiguity in the bankruptcy
notice since the amount stated to be payable is not quantified.
When issuing a bankruptcy notice against a judgment debtor, the bankruptcy notice
should particularize the amount including the interest which should be accurately quantified.
If the sum claimed is uncertain and ambiguous, the bankruptcy notice is incapable of being
complied with, and is therefore bad. The bankruptcy notice will be considered null and void.
The amount demanded in the bankruptcy notice should include the judgment sum and interest
up to the date of the issue of the bankruptcy notice and costs awarded in the judgment or
order.
According to Section 3(2)(ii) of the Insolvency Act 1967, the bankruptcy notice shall
not be invalidated by reason only that the sum specified in the notice as the amount due is
exceed the amount actually due unless within the time allowed for payment, debtor gives
notice to creditor on the ground of such mistake. However, if there is notice given, it shall be
deemed to have complied with the bankruptcy notice.
We can see in the case of UOBB v Loke Lai Ying & Anor where the court held that
any uncertainty or ambiguity would invalidate a bankruptcy notice. Bankruptcy notice should
particularize the amount including the interest which should be accurately quantified. It must
be accurate and in the exact sum. As in the case of Re Wong Su Tiung exp Yeo Hiap Seng
Trading S/B, the court held that it is not sufficient to just stipulate the rate of interest on the
basis that it can be translated to an exactly quantifiable sum at any given time. Therefore, it is
said that the amount including the interest must be quantified exactly and precisely.
By applying the law and the material cases given above, it is said that there was no
uncertainty or ambiguity in the bankruptcy notice issued by RB as the amount stated to be
payable was accurately quantified. We can see that in the summary judgment obtained by
RB,
It has precisely stated the sum of RM600,000 together with interest at 8% per annum from
the date of judgment to date of realisation as well as costs of RM1,600. On 12.2.2018,
bankruptcy notice served on Allen also contained a demand for the judgment sum of
RM600,000 together with interest and costs. Therefore, the interest and the cost are clearly
stated in both summary judgment and the bankruptcy notice.
In conclusion, there is no uncertainty or ambiguity in the bankruptcy notice as the
amount stated to be payable is accurately quantified by RB in both summary judgment and
bankruptcy notice.
Issue 3
The third issue in this case was whether the bankruptcy notice was not served
personally on Allen could be used as ground to set aside the bankruptcy notice.
There are two ways of service for the issuance of bankruptcy notice which are
personal service and substituted service. According to Section 3(2) of the Insolvency Act
1967, it is stated that the bankruptcy notice should be served personally to the debtor unless
the creditor can prove that the bankruptcy notice cannot be served personally so the
bankruptcy notice can be served through substituted service under Section 3(2A).
The Rule 95 of the Insolvency Rule 2017 also stated that a bankruptcy notice must
be served personally and be proved by an affidavit of service. The bankruptcy notice will be
affected by leaving the debtor a sealed copy of the bankruptcy notice after the server satisfied
himself that the person to be served is the debtor himself. Moreover, Rule 63(2) any process
which does not require personal service shall be deem to be sufficiently served upon a party
represented by a solicitor if left at the solicitor’s address for service. Besides that, Section
93(4) of the Insolvency Act 1967 has given discretion to the court to extend the time where
service could not be affected within the prescribed time, then the creditor may apply for an
extension of time.
However, substituted service is possible but refrains with stricter requirements. The
creditor must prove to the court that the debtor has the intention to defeat, delay or evade the
personal service, leaves or stays away from Malaysia or absents himself from his home or
place of business.
We can see in the case of Allied Bank (Malaysia) Bhd v Yau Jiok Hua where the
court held that personal service shall be affected by the process server after making sure that
he has found the right man. He should then hand to or leave with the person to be served a
copy of the writ. If the person intended for service evades service or will not take the copy,
the process server should tell him the contents of the writ and leave it as nearly in his
possession or control as he can. In the case of Siow Fook Keong v Lim Ean Chye, it is
unreasonable to be adamant on the rule of personal service if the judgment debtor evades the
service without good reasons although he was aware of the issuance of bankruptcy notice and
is physically near to the process server.
In the instant case, RB had filed and served a bankruptcy notice on Allen’s Solicitors
on 12.2.2018. Under Section 3(2) of the Insolvency Act 1967 and Rule 95 of the
Insolvency Rule 2017, RB should serve the bankruptcy notice to Allen personally but not to
Allen’s Solicitor unless it has given the right to the solicitor and serve it to the solicitor’s
address. However, the fact was silent on that. Therefore, we will presume that there is no
special notice to serve the bankruptcy notice to Allen’s solicitor. By applying the case of
Allied Bank (Malaysia) Bhd v Yau Jiok Hua, Allen’s solicitor cannot be considered as the
right person to served with the bankruptcy notice, thus Allen’s solicitor is not entitled to
accept the service on behalf on Allen. Besides that, as illustrate in the case of Siow Fook
Keong v Lim Ean Chye, as the bankruptcy notice was filed and served on 12.2.2018 to
Allen’s solicitor, it cannot be said that Allen was evading service as it was not personally
served to him. Due to the failure of personal service of BN by creditor, it is a good reason for
Allen to claim that the personal service was not effective by adopting the principle in this
case.
In conclusion, Allen may set aside the bankruptcy notice on the ground that the
bankruptcy notice was not served personally on him as stipulated under Section 3(2) of the
Insolvency Act 1967 and Rule 95 of the Insolvency Rule 2017.
Issue 4
The fourth issue in this case was whether Allen’s counter claim against RB for the
sum of RM400,000 is valid to set aside the bankruptcy notice.
According to Rule 93(1) of the Insolvency Rule 2017, filing of an affidavit shall
operate as an application to set aside the bankruptcy notice. We can see in the case of
Perwira Habib Bank Malaysia Bhd v. Samuel Pakianathan a/l Jabamanikam where the
court held that the counterclaim must be equal to or more than the debt claimed and it must
have been put in good faith with reasonable probabilities of success. A debtor could not set
up the counter claim in the action in which the judgment was obtained. As we see in the case
of Tan Thean Chooi v Kuwait Finance House (Malaysia) Bhd & Another Case,
judgment debtor applied to set aside bankruptcy notice on the basis that he had a
counterclaim, set-off or cross-demand against the judgment creditor. The court dismissed his
application on the basis that judgment debtor merely claimed that he had a counterclaim, set-
off or cross-demand against the judgment creditor without proving the same.
 By applying Rule 93, Allen was required to file an affidavit to set aside the
bankruptcy notice on the grounds that he has a counterclaim. However, he must prove that he
in fact has a counterclaim which is equal or more than the debt claim and must have been put
in good faith. Besides that, the fact only showed that Allen has a counter claim against RB for
the sum of RM400,000. Allen must produce more evidences and prove himself that he had a
strong stand for a counterclaim against the bankruptcy notice as illustration of Tan Thean
Chooi v. Kuwait Finance House (Malaysia) Bhd & Another Case. Mere claiming for a
counterclaim will not be accept by the court.
Furthermore, in the counterclaim by Allen against RB for the sum of RM400,000
which is lesser amount than the debt claim by RB which is sum of RM600,000 together with
interest at 8% per annum from the date of judgment to date of realization as well as costs of
RM1,600. Therefore, based on the illustration of Perwira Habib Bank Malaysia Bhd v
Samuel Pakianathan a/l Jabamanikam case, the counter-claim made by Allen has a lesser
amount than the debt claim by RB. The counter-claim must be equal or exceed the debt
claim.
In conclusion, Allen’s counter claim against RB for the sum of RM400,000 is invalid
to set aside the bankruptcy notice.
As a conclusion, Allen may appeal to SAR based on the reason that RB was not
served to him personally as stipulated under Section 3(2) of the Insolvency Act 1967 and
Rule 95 of the Insolvency Rule 2017. However, he cannot rely on the grounds that the
summary judgment is not a final judgment as per s. 3(1) Insolvency Act 1967, uuncertainty or
ambiguity in the bankruptcy notice since the amount stated to be payable is not quantified,
and counter claim against RB for the sum of RM400,000.