Tutorial 4

1. A creditor shall not be entitled to present a bankruptcy petition against a

debtor unless certain conditions are satisfied.
a. With reference to the Insolvency Act 1967, give details of such
conditions.

Conditions in which the creditor may petition against a debtor

(a) Debt must meet the threshold (s.5(1)(a) IA as amended); Form No. 41 of
IR paragraph 2
(b) the debt is a liquidated sum (s.5(1)(b) IA); Form No. 41 of IR paragraph 2
(c) the act of bankruptcy on which the petition is based on has occurred
within 6 months before the presentation of the petition (s. 5 (1)(c) IA). Form
No. 41 of IR paragraph 4

The person must fulfil the definition of debtor under s.3(3) and when the CP is
to be presented or filed the requirements must fulfil the requirements under
s.5(1)(d) IA

d) the debtor must be domiciled in Malaysia; or within 1 year before the date of
the presentation of the CP, the debtor has –
● Ordinarily resided in Malaysia; or
● Had a dwelling house in Malaysia; or
● Had a place of business in Malaysia; or
● Carried on business personally in Malaysia or through an agent; or
● Has been, or is, a member of a firm or partnership which has carried on
business in Malaysia by means of partner or partners or an agent or
manager.

b. With reference to the Creditor’s Petition in the Insolvency Rules 2017,

state which paragraphs in the Creditor’s Petition reflect these conditions.

2. On 20 January 2019 Coldplay Bank Bhd obtained a summary judgment

against Mr Pelupa in the Kota Kinabalu Sessions Court for the sum of
RM100,000 with interest at 5% per annum from judgment date to full and final
realization. The sum arose from a personal loan granted to Mr Pelupa by
Coldplay Bank Bhd’s branch in Kota Kinabalu. In April 2019 Mr Pelupa moved
from Kota Kinabalu to Kajang after he retired from his employment in Sabah.
He did not pay Coldplay Bank Bhd the judgment sum.

A BN was issued and served on Mr Pelupa by Coldplay Bank Bhd at 10 am on

2.3.2020. Mr Pepula did not comply with the BN. Coldplay Bank Bhd wish to
proceed with the filing of a creditor’s petition. On 15 May 2020 the officer from
Coldplay Bank Berhad met you to seek your advice on the following:

(i) Can Coldplay Bank Berhad file the bankruptcy petition in Sabah?

Under Rule 100 of the Insolvency Rules, a bankruptcy petition should be filed in the HC in
which it is to be presented. Under Practice Direction No. 3 of 1993, paragraph 2(ii) states that
a bankruptcy petition must be filed in the State in which the judgement debtor resides. It is
stated in the question that Mr Pelupa had moved from Kota Kinabalu to Kajang in April
2019. Applying Practice Direction No.3, Coldplay Bank Bhd should file the bankruptcy
petition in the HC of Malaya instead of the HC of Sabah as Mr Pelupa is now residing in
Peninsular Malaysia

(*However Rule 100 also states: Where the debtor has for the greater part of one year
immediately before the presentation of petition carried on business in one State and resided in
another, the petition may be filed in the court of the State in which he has carried on business.

Not really possible to apply this rule to this question because Coldplay Bank has not yet even
presented the petition however, if hypothetically, they present the petition earliest on the 15th
of May, then one year prior the 15th of May 2020 would be the 15th of May 2019: Mr Pelupa
had already moved to Kajang in April 2019-this is even before the start of the one year
allowance. Therefore, it would not be one year immediately before the presentation of the
petition and Coldplay Bank still has to file the bp in the HC of Malaya.

However, even if Coldplay Bank mistakenly files the bp in the HC of Sabah, they may rely
on the case of Re Chin Kwan Kee; ex parte Shriro Paper (M) Sdn Bhd [1999] 3 MLJ 497
whereby the debtor sought to strike out the creditor’s petition on the ground that the petition
was filed in a State other than the State in which the debtor was resident. The debtor’s
petition was dismissed but he appealed and the COA held that the filing of the petition in a
State other than the state the debtor is resident in, does not invalidate the petition. Under
Section 93(7) IA, the irregularity can be cured by transferring it to the proper court. In short,
even if Coldplay mistakenly files at the HC of Sabah, this won’t invalidate the bp and they
might rectify it through s.93(7)
 (ii) What is the last date for Coldplay Bank Berhad to file the bankruptcy
petition?

Under s.5 (1) (c) of the Insolvency Act, the act of bankruptcy must have occurred within 6
months before the presentation of the petition. In application to this question, Mr Pelupa
committed an act of bankruptcy when he failed to comply with the bankruptcy notice, on the
second of March 2020. According to s.5 (1) (c ), Coldplay Bank Bhd must then serve the
bankruptcy petition not later than 6 months from the second of March 2020-meaning the last
date to file the bankruptcy petition is on the 2nd of September 2020.

(As the question states that the officer from Coldplay Play Bank Bhd sought advice on the
15th of May, Coldplay still has 3 months and 18 days to file the bp)

iii. Whether you as their solicitor can execute the bankruptcy petition on their
behalf?
No, there is no provision for a solicitor to sign the petition on behalf of the petitioning
creditor

In the case of Re V David, Ex Parte United Asian Bank Bhd, the judgement debtor contended
that the petition was defective because inter alia, the petition was wrongly signed by the
solicitor, instead of the petitioners themselves. There was also no evidence that the attorney is
acting under a valid power of attorney. As such the attorney who signed the petition was not
lawfully authorized to sign the petition.

The Court had to consider whether this defect had caused a substantial injustice and whether
the injustice could be remedied by the Court. In view of the wrongly signed petition, the
Court found that that the defect was serious and that substantial injuries would be caused by
this defect. Held: The petition was dismissed.

(other defects in this case include: there was an attestation clause that was omitted and a
sealed copy of the petition was not served on the judgment debtor)

iv. Whether you as their solicitor practising in Kuala Lumpur can attest
the bankruptcy petition?
 No, it was held in the case of Lie Kok Keong v Tang Container and Services
Sdn Bhd [2004] 1 MLJ 373 COA: An advocate and solicitor in Peninsular
Malaysia is not authorized to attest to a petition in Sabah and Sarawak even if the
petition is to be filed in the HC in Malaya and vice versa.

v. Who should affirm the affidavit verifying the petition?

Under s.133(a) IA, if the petitioner is a corporation, it is to be affirmed by an authorized

person by the corporation under the company’s seal.
Under 215 (1) IR, it also echoes how ‘apabila suatu perbadanan menyerahkan suatu
petiyen…pegawai perbadanan itu boleh bertindak atas namanya sendiri, menyatakan bahawa
dia adalah pengawai yang diberi kuasa dengan sewajarnya di bawah meterai tetapi suatu
petisyen boleh diserahkan oleh perbadanan itu dan ditandatangani oleh pegawai itu bagi
pihak perbadanan’
In the case of Re See Joon Siong ex p Mayban Securities Sdn Bhd – CP was signed by the
company’s officer as its duly authorized agent under seal. He claimed to be duly authorised to
act for the company under seal, but was only able to show by his affidavit that a resolution of
the company authorized him to affirm affidavits and other legal documents pertaining to
trading.

HC held that r.215 did not state that the requirement of being authorized ‘under seal’ must be
adhered to at all costs and that a failure to conform to the requirement would render the
petition void. The resolution did not specify that he was authorised to present BP but the
concept of ‘implied authority’ was recognised.

3. Coldplay Bank Berhad (bank) wants to proceed with creditor’s petition

against Mr Hutang who has not complied with the bankruptcy notice served on
him by the bank. The bank was instructed by its solicitors to execute the
creditor’s petition and affirm the affidavit verifying the petition to enable them
to proceed with the bankruptcy proceedings. The creditor’s petition was
executed and attested on 10.2.2020. The affidavit verifying the petition was
affirmed on 8.2.2020. The creditor’s petition and the verifying affidavit were
filed into court on 14.2.2020 and were then served on you as solicitors for the
debtor, Mr Hutang.
You have notified Mr Hutang regarding the creditor’s petition. He now seeks
your advice on the following:

(i) Whether the creditor’s petition was properly served on him;

(ii) Whether the creditor’s petition was invalid because the verifying petition
was affirmed before the creditor’s petition was executed and attested.

On 1.3.2020, you were informed by Mr. Hutang’s wife that he has passed away.
Mr Hutang’s wife wants to know whether the bankruptcy proceeding will
continue. Advice Mr Hutang’s wife.

4. On 17.4.2019, Top Bank obtained judgment against Alice in KL High

Court for RM500,000.00 together with interest and costs. On 2.5.2020, Top
Bank served a bankruptcy Notice on Alice and she ignored it. On 2.6.2020, Top
Bank filed and served a Creditors Petition on Alice together with an affidavit
verifying the petition on Alice. The Creditors Petition was attested by a
Solicitor from Kuching, Sarawak. Alice intends to oppose the Petition, advise
Alice.