TUTORIAL 1

QUESTION 1
On 24 March 2020 G Co. S/B (G Co.) obtained judgment in default against D for a sum of
RM56,000/-at the Melaka Sessions Court. On 15 May 2021 G Co. applied for a Request to
issue Notice of Bankruptcy. On 18 Aug. 2021 G Co. obtained an order to serve the Bankruptcy
Notice by way of substituted service. On 25 Sept. 2021 it was advertised in the Malay Mail and
Star newspaper, posted at D’s last known address and at the notice board at the Melaka High
Court. On 30 Oct. 2021 D applied to set aside the Bankruptcy Notice on the grounds that:-
• the service was irregular
• the amount stated in the Bankruptcy Notice was wrong as he had paid a sum of RM
28,000/- towards full and final settlement of his judgment sum in June 2020 before he
left for Vietnam.
• Since June 2020 he was working in Vietnam and was resident there with his family.
• He had no residence or bank accounts or assets of any kind in Malaysia.
Advise D on the merits of his application.

Answer:
This question requires us to advise D on the merits of his application to set aside the Bankruptcy
Notice. Before discussing the main issues, we need to first determine whether D’s debt falls
within the threshold of being declared bankrupt pursuant to Insolvency (Amendment)
Act 2020?
According to S.2(a) of Insolvency (Amendment) Act 2020, S.5 of the Insolvency Act 1967
is amended with effect that the amount of indebtedness to be increased to RM100,000 with
effect from 1.9.2021.
S.3 of Insolvency (Amendment) Act 2020 provides that any bankruptcy petition presented by
the petitioning creditor against a debtor before the coming into operation of Insolvency
(Amendment) Act 2020 shall be deemed to remain the same as if the Insolvency Act has not
been amended.

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Before the coming into operation of the Insolvency (Amendment) Act 2020, S.5(1)(a) of the
Insolvency Act 1967 provides that the threshold for the creditor to present a bankruptcy
petition against a debtor is RM50,000.
In our current case, on 18 Aug. 2021 G Co. obtained an order to serve the Bankruptcy Notice
by way of substituted service. On 25 Sept. 2021 it was advertised in the Malay Mail and Star
newspaper, posted at D’s last known address and at the notice board at the Melaka High Court.
On 25 Sept 2021 G Co. is still in the process of serving the bankruptcy notice to D. It is safe
assume that the petition is to be presented later than 25 Sept 2021 as the presentation of petition
is a step after the service of bankruptcy notice. The Insolvency (Amendment) Act 2020 came
into effect from 1 Sept 2021. By applying S.3 of Insolvency (Amendment) Act 2020, only
the bankruptcy petition presented before the amendment would not be caught by the new
threshold. However, since the petition in our current case will only be presented at a date later
than 25 Sept 2021, D’s debt which amounts toRM56,000 falls within the threshold of being
declared bankrupt pursuant to Insolvency (Amendment) Act 2020 i.e. RM100,000.
In short, D’s debt which amounts to RM56,000 falls within the threshold of being declared
bankrupt pursuant to Insolvency (Amendment) Act 2020 i.e. RM100,000. The minimum
threshold of being declared a bankrupt has not been satisfied. Thus, the bankruptcy notice can
be set aside.

The first issue is whether the bankruptcy notice can be set aside on the ground that the
service was irregular?
According to Rule 94 of the Insolvency Rules 2017, subject to the power of the court to extend
the time, a bankruptcy notice shall be served within three months from the issue of the
bankruptcy notice.
Subject to the power of the court to extend the time, a bankruptcy notice shall be served within
three months from the issue of the bankruptcy notice.
S.3(2) of Insolvency Act 1967 provides that the bankruptcy notice is to be served personally
to the debtor.
According to S.3(2A) of Insolvency Act 1967, the court has discretion to make an order of
substituted service of a bankruptcy notice if the creditor can prove that the debtor intends to
defeat, delay or evade personal service (a) departs out of Malaysia or being out of Malaysia
remains out of Malaysia; or
According Rule 95 of Insolvency Rules 2017, a bankruptcy notice shall be served and the
service of the bankruptcy notice shall be proved in the manner specified in these Rules which
prescribed for the service of a creditor’s petition.
Rule 109(1) of Insolvency Rules 2017 provides that substituted service can be effected if the
court satisfies that the prompt personal service cannot be affected under rule 108. Substituted
service can be done (a) by advertising the petition in one local paper, (b) by placing the petition
on the notice board of the court premises; and (c) any other means that the court thinks fit and
just to bring the petition to the notice of the person to be served.

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Moving on, S.3(2C) of Insolvency Act 1967 provides that a substituted service of a bankruptcy
notice, in relation to which an order is made under this section, is effected by taking such steps
as the court may direct to bring the bankruptcy notice to the person to be served.
In our current situation, G Co obtained the substituted service on 18 Aug. 2021. G Co has
posted at D’s last known address on 25 Sept. 2021. Therefore, the service us well within three
months as required by Rule 94 of the Insolvency Rules 2017.
Applying S.3(2) of Insolvency Act 1967, G Co bears the responsibility to serve the bankruptcy
notice to D personally upon getting the approval of the court. In this case, since June 2020, D
was working in Vietnam and was resident there with his family. Applying S.3(2A) of
Insolvency Act 1967, the court has discretion to make an order of substituted service of a
bankruptcy notice if G Co can prove that the D intends to defeat, delay or evade personal
service. We can assume that D intended to defeat, delay or evade personal service because he
remains out of Malaysia since June 2020.
Referring to Rule 95 of Insolvency Rules 2017, a bankruptcy notice shall be served by G Co
and the service of the bankruptcy notice shall be proved in the manner specified in these Rules
which prescribed for the service of a creditor’s petition. In this case, on 25 Sept. 2021 G Co
advertised the bankruptcy notice in the Malay Mail and Star newspaper, posted at D’s last
known address and at the notice board at the Melaka High Court. This is in line with Rule
109(1)(a) of Insolvency Rules 2017 which provides that substituted service can be done by
advertising the petition in one local paper. Applying S.3(2C) of Insolvency Act 1967, G Co
has served the bankruptcy notice to D by taking such steps as the court may direct to bring the
bankruptcy notice to the person to be served.
To conclude, it is unlikely that the bankruptcy notice can be set aside on the ground that the
service was irregular as the service done by G Co was regular.

The second issue is whether the bankruptcy notice can be set aside on the ground that the
amount stated in the Bankruptcy Notice was wrong?
S.3(1)(i) of Insolvency Act 1967 provides that if the creditor has obtained a final judgement
or final order against him by leave of court, a bankruptcy notice requiring him to pay the
judgement debt with interest quantified up to the date of the issue of the bankruptcy notice, he
can dispute the amount of the judgement debt to be paid within seven days from the date of
service of the bankruptcy notice.
S.3(2)(ii) of Insolvency Act 1967 provides that a bankruptcy notice shall not be invalidated by
the reason that the sum specified in the notice as the amount due exceeds the amount actually
due unless the debtor within the time allowed for payment gives notice to the creditor that he
disputes the validity of the notice on the ground of such mistake.
In our current situation, on 18 Aug. 2021 G Co. obtained an order to serve the Bankruptcy
Notice by way of substituted service. On 25 Sept. 2021 it was posted at D’s last known address
and at the notice board at the Melaka High Court. D had paid a sum of RM 28,000/- towards
full and final settlement of his judgment sum in June 2020 before he left for Vietnam. Applying
S.3(1)(i) of Insolvency Act 1967, D can dispute the amount of the judgement debt to be paid
within seven days from the date of service of the bankruptcy notice. However, D only objected

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to it on 30 Oct. 2021 which is not within the seven days from the date of the service of
bankruptcy notice. The bankruptcy notice shall not be invalidated by the reason that the sum
specified in the notice as the amount due exceeds the amount actually due because D did not
give notice to G Co within the time allowed pursuant to S.3(2)(ii) of Insolvency Act 1967.
Therefore, this ground of application to set aside the bankruptcy notice is unlikely to succeed.
To conclude, it is unlikely that the bankruptcy notice can be set aside on the ground that the
amount stated in the Bankruptcy Notice was wrong because D did not dispute the sum and
notified G Co. within the seven days duration stipulated under S.3(1)(i) of Insolvency Act
1967.

The third issue is whether the bankruptcy notice can be set aside on the ground that since
June 2020 D was working in Vietnam and was resident there with his family?
S.3(3)(b) of Insolvency Act 1967 provides that "debtor" in this Act shall be deemed to include
any person who at the time when the act of bankruptcy was done or suffered by him ordinarily
resided or had a place of residence in Malaysia.
In Re Peh Kong Wan, the debtor moved to Singapore and obtained the status of permanent
resident. However, he continued to hold his Malaysian passport and returned to Malaysia to
renew his passport. The court held that he was domiciled in Malaysia.
In Re James Kuok Khoon Huai ex parte Lim & Tan Securities Pte Ltd, the court held that
the debtor had not changed his domicile as an allegation of change of domicile must be proved
with perfect clearness, which formed a “final and settled purpose” or “determination” to
abandon his existing domicile.
In our current situation, D is trying to argue that the bankruptcy notice can be set aside on the
ground that since June 2020 D was working in Vietnam and was resident there with his family.
However, relying on the fact that D was residing in Vietnam since June 2020 is insufficient to
strike out the bankruptcy notice according to Re Peh Kong Wan. Applying Re James Kuok
Khoon Huai ex parte Lim & Tan Securities Pte Ltd, if D wishes to rely on the ground that
he resided in Vietnam since June 2020, then he has to prove it clearly which can show that he
his certain to abandon his existing domicile i.e. Malaysia.
To conclude, it is unlikely that the bankruptcy notice can be set aside on the ground that since
June 2020 D was working in Vietnam and was resident there with his family.

The fourth issue is whether the bankruptcy notice can be set aside on the ground that D
had no residence or bank accounts or assets of any kind in Malaysia?
In Re James Kuok Khoon Huai ex parte Lim & Tan Securities Pte Ltd, the court held that
the debtor had not changed his domicile as an allegation of change of domicile must be proved
with perfect clearness, which formed a “final and settled purpose” or “determination” to
abandon his existing domicile.
S.2 of Insolvency Act 1967 provides that “property” includes money, goods, things in action,
land and every description of property, whether real or personal and whether situate in Malaysia

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or elsewhere, also obligations, easements and every description of estate, interest and profit,
present or future, vested or contingent, arising out of or incident to property as above defined.
S.8(1) of Insolvency Act 1967 provides that all the property of the bankrupt shall become
divisible among his creditors and shall vest in the Director General of Insolvency and the
Director General of Insolvency shall be the receiver, manager, administrator and trustee of all
properties of the bankrupt.
Applying Re James Kuok Khoon Huai ex parte Lim & Tan Securities Pte Ltd, it is unlikely
that the bankruptcy notice can be set aside on the ground that D had no residence in Malaysia
because an allegation of change of domicile must be proved with perfect clearness. Merely
alleging that D has no residence in Malaysia is insufficient to satisfy the requirement of “final
and settled purpose” or “determination” to abandon his existing domicile.

Moving on, applying S.2 of Insolvency Act 1967, the word “property” includes the property
inside or outside Malaysia. Therefore, the fact that D had no bank accounts or assets of any
kind in Malaysia does not preclude the Director General of Insolvency from taking possession
of his properties as all D’s properties whether inside or outside Malaysia are vested in the
Director General of Insolvency pursuant to S.8(1) of Insolvency Act 1967.
To conclude, it is unlikely that the bankruptcy notice can be set aside on the ground that D had
no residence or bank accounts or assets of any kind in Malaysia.