[2013] 6 CLJ Lim Boon Kiak v.

Affin Bank Bhd 579

A LIM BOON KIAK

v.

AFFIN BANK BHD

B COURT OF APPEAL, PUTRAJAYA
RAMLY ALI JCA
MAH WENG KWAI JCA
DAVID WONG DAK WAH JCA
[CIVIL APPEAL NO: J-03(IM)-163-10-2012]
C 22 FEBRUARY 2013

BANKRUPTCY: Creditor’s petition - Setting aside - Service of -

Creditor’s petition served on appellant’s solicitors - Whether solicitors had
authority to accept service of documents - Whether mandatory for
D creditor’s petition to be served personally on judgment debtor - Failure to
comply with rr. 109 & 110 Bankruptcy Rules 1969 - Whether fatal or
mere irregularity

CIVIL PROCEDURE: Judgments and orders - Judgment in default -

Setting aside - Application for - Whether there were merits in application
E
to set aside

The appellant filed an application before the Deputy Registrar to

set aside the service of the creditor’s petition and the adjudication
order and receiving order (‘AORO’) granted against him. However,
F his application was dismissed by the Deputy Registrar. The
appellant then filed an appeal before the Judicial Commissioner
against the said decision, which was also dismissed. Thus, the
appellant filed this present appeal in the Court of Appeal. The
issues raised to support the appellant’s appeal were (i) that the
G service of the creditor’s petition was not effected personally on the
appellant (as the judgment debtor) but was served on the
solicitors in contravention of r. 109 of the Bankruptcy Rules 1969;
and (ii) that the judgment in default was not a final judgment on
the ground that an application to set aside the said judgment was
H filed at the Sessions Court within time and the application was still
pending. The respondent, on the other hand, contended that the
service was regular in law despite the fact that the creditor’s
petition was only served by post on the appellant’s solicitors
Tetuan Tan Hee Soon & Co but not personally on the appellant.
I The respondent further claimed that the appellant only filed his
application to set aside the service of the creditor’s petition after
the AORO was granted against him.
580 Current Law Journal [2013] 6 CLJ

Held (allowing the appeal with costs) A

Per Ramly Ali JCA delivering the judgment of the court:

(1) Bankruptcy proceedings have a serious penal effect on a

judgment debtor. He might be adjudged a bankrupt and his
personal liberties might be at stake until his bankruptcy has B
been discharged. Therefore, the process and procedure in the
proceedings must comply with the relevant provisions of the
bankruptcy rules; including on the issue of service of the
relevant cause papers on the judgment debtor. Rule 109 of the
Bankruptcy Rules 1969 makes it mandatory for the creditor’s C
petition to be served personally on the judgment debtor. The
sealed copy of the petition must be delivered personally on
the debtor. The creditor’s petition could not be served by any
other means. (paras 9 & 12)
D
(2) Unless there was a clear indication (in writing) that a firm of
solicitors had the authority to accept service of the documents
on behalf of the judgment debtor, it could not be served on a
firm of solicitors. Herein, the affidavit of service by the
respondent deposed that the said creditor’s petition was
E
served on the appellant’s solicitor. However, there was no
indication to show that the said solicitor had the authority to
accept service of the creditor’s petition on behalf of the
judgment debtor. Hence, the said service of the creditor’s
petition on the judgment debtor was bad for failure to comply
F
with the relevant rules ie, r. 109 and r. 110 of the Bankruptcy
Rules 1969. It was fatal to the respondent’s case and was not
a mere irregularity which could be cured. (paras 12, 13 & 16)

(3) Before a judgment debtor could exercise his right to object or

to challenge the creditor’s petition within the time stipulated, G
the creditor’s petition must first have been served effectively
on him. If the service is bad, the issue of raising any objection
on the petition would not arise. Failure to serve the petition
personally on the judgment debtor would cause substantial
injustice to him. He would not be able to exercise his right to H
object or to challenge the petition within the stipulated time,
more so, as in the present case, where the judgment debt was
obtained by way of a judgment in default. (para 17)

(4) The appellant did not know of the judgment in default I

obtained by the respondent. After knowing about it, the
appellant had filed an application at the Sessions Court to set
aside the said judgment in default. Besides the notice of
 [2013] 6 CLJ Lim Boon Kiak v. Affin Bank Bhd 581

A demand on the amount claimed from the respondent’s

solicitors, the appellant did not receive any writ and statement
of claim on the said sum issued by the Sessions Court. The
appellant thus had merit in his application to set aside the
judgment in default on which the respondent based its
B bankruptcy notice and the creditor’s petition. (para 18)

Bahasa Malaysia Translation Of Headnotes

Perayu telah memfailkan permohonan kepada Timbalan Pendaftar

untuk mengenepikan penyerahan petisyen pemiutang dan perintah
C
penghakiman dan penerimaan (‘AORO’) terhadapnya. Walau
bagaimanapun, permohonannya ditolak. Perayu kemudiannya
memfailkan rayuan kepada Pesuruhjaya Kehakiman terhadap
keputusan tersebut, yang juga ditolak. Oleh itu, perayu memfailkan
rayuan ini kepada Mahkamah Rayuan. Isu-isu yang timbul untuk
D
menyokong rayuan perayu adalah (i) penyerahan petisyen
pemiutang tidak dilaksanakan secara kediri kepada perayu (sebagai
penghutang penghakiman) tetapi telah diserahkan ke atas peguam-
peguamnya dengan melanggar k. 109 Kaedah-Kaedah Kebankrapan
1969; dan (ii) penghakiman ingkar bukan penghakiman muktamad
E
atas alasan bahawa permohonan untuk mengenepikan penghakiman
tersebut telah difailkan di Mahkamah Sesyen dalam tempoh masa
yang dibenarkan dan permohonan tersebut masih belum selesai.
Responden, walau bagaimanapun, menghujahkan bahawa penyerahan
adalah teratur dari segi undang-undang walaupun petisyen
F
pemiutang itu diserahkan melalui pos kepada peguamcara perayu,
Tetuan Tan Hee Soon & Co tetapi bukan secara kediri ke atas
perayu. Responden juga mendakwa bahawa perayu hanya
memfailkan permohonannya untuk mengenepikan serahan petisyen
pemiutang selepas AORO dibenarkan terhadapnya.
G
Diputuskan (membenarkan rayuan dengan kos)
Oleh Ramly Ali HMR menyampaikan penghakiman mahkamah:

(1) Prosiding kebankrapan mempunyai kesan yang serius ke atas

H penghutang penghakiman. Dia mungkin dihukum sebagai
seorang yang muflis dan kebebasan peribadinya mungkin
menghadapi risiko sehingga kebankrapan dilepaskan. Oleh itu,
proses dan prosedur dalam prosiding harus mematuhi
peruntukan-peruntukan relevan kaedah-kaedah kebankrapan;
I termasuk isu penyerahan kertas-kertas kausa yang berkenaan
ke atas penghutang penghakiman. Kaedah 109 Kaedah-
Kaedah Kebankrapan 1969 mewajibkan petisyen pemiutang
582 Current Law Journal [2013] 6 CLJ

diserahkan secara kediri kepada penghutang penghakiman. A

Salinan petisyen yang dimeterai harus diserahkan secara kediri
kepada penghutang. Petisyen pemiutang tidak boleh diserahkan
melalui mana-mana cara yang lain. (perenggan 9 & 12)

(2) Melainkan jika terdapat petunjuk yang jelas (dalam tulisan) B

bahawa sebuah firma peguam mempunyai kuasa untuk
menerima serahan dokumen-dokumen bagi pihak penghutang
penghakiman, ia tidak boleh diserahkan kepada firma peguam.
Di sini, afidavit penyampaian responden menyatakan bahawa
petisyen pemiutang telah diserahkan kepada peguam perayu. C
Tetapi, tiada petunjuk yang menunjukkan peguam tersebut
mempunyai kuasa untuk menerima penyerahan petisyen
pemiutang bagi pihak penghutang penghakiman. Oleh itu,
penyerahan petisyen pemiutang tersebut ke atas penghutang
penghakiman adalah tidak sah atas kegagalan mematuhi D
kaedah-kaedah relevan iaitu k. 109 dan k. 110 Kaedah-Kaedah
Kebankrapan 1969. Ia telah menjejaskan kes responden dan
bukanlah ketidakaturan semata-mata yang boleh dipulihkan.
(perenggan 12, 13 & 16)
E
(3) Sebelum penghutang penghakiman boleh melaksanakan haknya
untuk membantah atau mencabar petisyen pemiutang dalam
masa yang ditetapkan, petisyen pemiutang harus diserahkan
dengan berkesan ke atasnya. Jika penyerahan adalah tidak sah
(seperti di dalam kes ini) isu membangkitkan bantahan ke atas
F
petisyen tidak timbul. Kegagalan menyerahkan petisyen secara
kediri ke atas penghutang penghakiman akan menyebabkan
ketidakadilan yang substansial. Dia tidak dapat melaksanakan
haknya untuk membantah atau mencabar petisyen dalam masa
yang ditetapkan, lebih-lebih lagi, dalam kes ini, di mana hutang
G
penghakiman diperolehi melalui penghakiman ingkar.
(perenggan 17)

(4) Perayu tiada pengetahuan mengenai penghakiman ingkar yang

diperolehi oleh responden. Selepas mengetahui mengenainya,
perayu telah memfailkan permohonan di Mahkamah Sesyen H
untuk mengenepikan penghakiman ingkar tersebut. Selain
daripada notis tuntutan berkenaan jumlah yang dituntut oleh
peguam-peguam responden, perayu tidak menerima writ atau
penyata tuntutan berkenaan jumlah tersebut yang dikeluarkan
oleh Mahkamah Sesyen. Perayu oleh itu mempunyai merit I
dalam permohonannya untuk mengenepikan penghakiman
ingkar di mana responden berdasarkan notis kebankrapan dan
petisyen pemiutangnya. (perenggan 18)
 [2013] 6 CLJ Lim Boon Kiak v. Affin Bank Bhd 583

A Legislation referred to:

Bankruptcy Rules 1969, rr. 109, 110, 117

For the appellant - Wong Kai Fen; M/s Tan Hee Soon, Wong & Partners
For the respondent - Mohd Fairuz Mahmood; M/s Mohd Akhir & Partners

B Reported by Suhainah Wahiduddin

JUDGMENT

C Ramly Ali JCA:

[1] The appeal before us is against the decision of the learned

Judicial Commissioner (dated 12 September 2012) dismissing the
appellant’s appeal against the decision of the learned Deputy
D Registrar (dated 26 June 2012) where the learned Deputy
Registrar had dismissed his application to set aside the service of
the creditor’s petition and granted the adjudication order and
receiving order (AORO) dated 15 September 2011 against him.

Brief Facts
E
[2] The respondent, Affin Bank Berhad had on 30 September
2009 obtained a judgment-in-default against the appellant.
A bankruptcy notice was filed against the appellant on 29 April
2010 and was served on him by way of substituted service.
F Subsequently, a creditor’s petition was filed on 12 November
2010; and an affidavit of service was affirmed on 25 March 2011.

[3] In respect of the judgment-in-default, the appellant had filed

an application to set aside the said judgment at the Sessions
G Court. The said application is still pending.

[4] In respect of the creditor’s petition, the appellant had filed

an application before the learned Deputy Registrar (vide encl. 20)
to stay the execution of the said judgment-in-default. On
15 September 2011, the learned Deputy Registrar dismissed the
H
stay application and proceeded to grant the AORO against the
appellant.

[5] On 14 November 2011, the appellant filed an application to

set aside the service of the creditor’s petition and the AORO
I before the learned Deputy Registrar. However his application was
dismissed by the learned Deputy Registrar. The appellant then
filed an appeal before the learned Judicial Commissioner in
584 Current Law Journal [2013] 6 CLJ

chambers against the said decision of the learned Deputy A

Registrar. Again, the appeal was dismissed by the learned Judicial
Commissioner. Then the appellant filed an appeal to the Court of
Appeal against the decision of the learned Judicial Commissioner.
Hence the present appeal before us.
B
At the Court of Appeal

[6] Before us, learned counsel for the appellant raised two issues
to support his appeal – namely:

(a) that the service of the creditor’s petition was not effected C
personally on the appellant (as the judgment debtor) but was
served on the solicitors in contravention of r. 109 of the
Bankruptcy Rules 1969; and
(b) that the judgment-in-default was not a final judgment on the D
ground that an application to set aside the said judgment was
filed at the Sessions Court within time and the application is
still pending.

On these two grounds the appellant submitted that the service of

E
the creditor’s petition and the AORO must be set aside.

[7] The respondent on the other hand contended that the

service was regular in law despite the fact that the creditor’s
petition was only served by post to Tetuan Tan Hee Soon & Co
on 23 March 2011 but not personally on the appellant. The F
respondent submitted that the appellant knew about the petition
and had not raised any objection on the issue of service. The
respondent further claimed that the appellant only filed
his application to set aside the service of the creditor’s petition
(on 14 November 2011) after the AORO was granted against him G
on 15 September 2011.

[8] The learned Judicial Commissioner in dismissing the

appellant’s application ruled that the failure in complying with
r. 109 of the Bankruptcy Rules 1969, by not serving the H
creditor’s petition personally on the appellant was just a mere
irregularity as the appellant had not raised any objection earlier;
and the objection was only raised after the AORO was granted.
It was further indicated by the learned Judicial Commissioner that
the appellant was not prejudiced and the AORO granted was I
regular in law.
 [2013] 6 CLJ Lim Boon Kiak v. Affin Bank Bhd 585

A Our Findings

[9] Bankruptcy proceedings have a serious penal effect on

a judgment debtor. He may be adjudged a bankrupt and
his personal liberties may be at stake until his bankruptcy is
B discharged. Therefore the process and procedure in the
proceedings must comply with the relevant provisions of the
bankruptcy rules; including on the issue of service of the relevant
cause papers on the judgment debtor.

[10] Rule 109 of the Bankruptcy Rules 1969 provides as follows:

C
109 Personal Service.

A creditor’s petition shall be personally served and the

service shall be affected by an officer of the court or by
the creditor or his solicitor or a person in their employment
D
by delivering a sealed copy of the petition to the debtor.

[11] Rule 110 of the same Rules, provides for service of the
petition by way of substituted service. It reads:

E
110 Substituted service.

(1) If the court is satisfied by affidavit or other evidence on oath

that prompt personal service cannot be effected because the
debtor is keeping out of the way to avoid service of the
petition or any other legal process or for any other cause it
F may order substituted service to be effected in such manner
as it thinks fit.

(2) Where any such order has been carried out the petition shall
be deemed to have been duly served on the debtor.

G [12] Rule 109 makes it mandatory for the creditor’s petition to

be served personally (kediri) on the judgment debtor. The sealed
copy of the petition must be delivered personally to the debtor.
In the event that prompt personal service cannot be effected,
after attempts have been made, the only avenue left is to apply
H for substituted service as provided for under r. 110. Substituted
service can only be effected with leave of the court. With the clear
provisions of the above rules, it is our view that the creditor’s
petition against a judgment debtor cannot be served by any other
means. It cannot be served on a firm of solicitors, unless there is
I a clear indication (in writing) that the said firm of solicitors has the
authority to accept service of the documents on behalf of the
judgment debtor.
586 Current Law Journal [2013] 6 CLJ

[13] In the present case, the affidavit of service by the A

respondent deposes that the said creditor’s petition was served on
“Peguamcara defendan iaitu Tetuan Tan Hee Soon & Co
(peguambela dan peguamcara) di alamat No. 14-2 (2nd Floor)
Jalan Harimau Taman Century Garden, 80250 Johor Bahru,
Johor.” There is no indication to show that the said solicitor has B
the authority to accept service of the creditor’s petition on behalf
of the judgment debtor. Learned counsel for the respondent on
being queried by the court could not produce any form of
‘authority’ authorising the said solicitors to accept service of the
petition on behalf of the judgment debtor. C

[14] The process server in her affidavit of service states that:

Saya telah dimaklumkan oleh Plaintif bahawa Defendan di atas
masih tinggal di alamat B10, Kg Baru Ban Foo, 81800 Ulu
Tiram, Johor dan/atau No. GM11, Lot 1356, Mukim Sungai D
Terap, 84000 Muar, Johor seperti mana alamat di dalam surat
Perjanjian Pinjaman. Defendan juga telah tidak memaklumkan
kepada pihak Plaintif sebarang pertukaran alamat yang baru. Oleh
itu, saya percaya bahawa alamat tersebut adalah alamat terakhir
Defendan. E

[15] The averment by the process server clearly shows that she
knew that the judgment debtor was staying at the given address
(as stated in the relevant loan agreement) and believed that the
said given address was the last known address of the judgment
F
debtor. But, there is no indication to show that any attempt had
been made to effect service personally on the judgment debtor at
the said address. The appellant complained that the petition was
not served personally on him and he had never authorised the
solicitors Tetuan Tan Hee Soon & Co to accept service of the
G
petition on his behalf.
[16] In the premise, we are of the view that the said service of
the creditor’s petition on the judgment debtor was bad for failure
to comply with the relevant rules ie, r. 109 and r. 110 of the
Bankruptcy Rules 1969. It is fatal to the respondent’s case. It is H
not a mere irregularity which can be cured.

[17] The respondent argued that the appellant cannot raise any
objection on the service of the creditor’s petition on the ground
that any objection must be made within the stipulated time in I
accordance with r. 117 of the Bankruptcy of Rules 1969. This
argument in our view does not hold water at all. Our view is that
before a judgment debtor can exercise his right to object or to
 [2013] 6 CLJ Lim Boon Kiak v. Affin Bank Bhd 587

A challenge the creditor’s petition within the time stipulated the

creditor’s petition must first have been served effectively on him
as provided for under r. 109 or r. 110. If the service is bad (as in
the present case) the issue of raising any objection on the petition
does not arise. A judgment debtor cannot be faulted for failure to
B raise objection within the stipulated time if the service of the
creditor’s petition is irregular and bad in law. Failure to serve the
petition personally on the judgment debtor will cause substantial
injustice to him. He will not be able to exercise his right to object
or to challenge the petition within the stipulated time, more so, as
C in the present case where the judgment debt was obtained by
way of a judgment-in-default.

[18] The appellant claimed that he did not know about the
judgment-in-default (which was obtained by the respondent on
D 30 September 2009). After knowing about it the appellant had
filed an application at the Sessions Court Johor Bahru to set aside
the said judgment-in-default. The appellant also claimed that
beside the notice of demand on the amount claimed from the
respondent’s solicitors, he did not receive any writ and statement
E of claim on the said sum issued by the Sessions Court. He also
claimed that he has merit in his application to set aside the
judgment-in-default and that the respondent’s claim against him
was time barred. On this issue, we agree that the appellant has
merit in his application to set aside the judgment-in-default on
F which the respondent based its bankruptcy notice and the
creditor’s petition.

Conclusion

[19] Based on the above consideration, we allow the appeal with

G costs of RM5,000 to the appellant. We set aside the order of the
High Court. Consequently, we allow the appellant’s application to
set aside the creditor’s petition as well as the AORO dated
15 September 2011. We also make an order that the deposit be
refunded to the appellant.
H