Yew Huoi, How & Associates | Leading Malaysia Law Firm

Menu

LEGAL REQUIREMENTS FOR ISSUING BANKRUPTCY NOTICES ON AGED JUDGMENTS: AN ANALYSIS OF ORDER 46 RULE 2(1)(A)

ILLUSTRATIVE SCENARIO

A Judgment Creditor (JC) issued a bankruptcy notice (BN) on a judgment over six years old without first obtaining the required court leave under Order 46 rule 2(1)(a) of the Rules of Court 2012. This scenario raises pertinent questions about the adherence to established legal frameworks when initiating bankruptcy proceedings based on aged judgments.

KEY ISSUES

  • Should the bankruptcy notice be set aside due to non-compliance with the requisite preconditions?
  • Is it mandatory for a JC to be in a position to execute the judgment immediately before issuing a BN?
  • Does the Federal Court’s decision in Ambank (M) Bhd v Tan Tem Son, which implies that leave of court under Order 46 rule 2(1)(a) is not necessary for issuing a BN on judgments older than six years, deviate from established legal principles?
  • Should Order 46 rule 2 of the Rules of Court 2012 be overridden by interpreting bankruptcy proceedings merely as an ‘action upon a judgment’, governed only by section 6(3) of the Limitation Act 1953?

LAWS & LEGAL PRINCIPLES

  • Section 3(1)(i) of the Bankruptcy Act 1967 outlines the conditions under which a creditor may petition for a debtor’s bankruptcy in Malaysia.
  • Order 46 Rule 2(1)(a) of the Rules of Court 2012 provides that a writ of execution to enforce a judgment cannot be issued without court leave if six years have lapsed since the judgment date.

APPLICATION TO SCENARIO

  • In this scenario, the court is likely to find that a JC who commenced bankruptcy proceedings after more than 6 years had elapsed from the date of the judgment must obtain prior leave of court pursuant to Order 46 rule 2 of the Rules of Court 2012.
  • When the BN was issued, the respondent was not in a position to execute the judgment and therefore was not entitled to issue the BN.
  • A bankruptcy proceeding was not execution, but a creditor’s right to issue bankruptcy was pegged to his right to proceed execution.
  • A creditor was not entitled to issue bankruptcy if he was not in a position to issue execution on the judgment at the time the BN was issued.
  • Ex parte Woodall was the first and foremost authority to be followed on the meaning of the words ‘execution thereon not having been stayed’ and the meaning of that phrase should be construed in section 3(1) of the Bankruptcy Act is not from the perspective of the Limitation Act 1953.

REFERENCE CASES

  • Tan Chwee Hock v Ambank (M) Bhd [2012] 4 MLJ 159; [2012] MLJU 85; [2012] MLJU 418; [2012] MLJU 24
  • Perwira Affin Bank Bhd v Lim Ah Hee [2004] 3 MLJ 253; [2004] 3 AMR 699; [2004] 2 CLJ 787
  • Dr Shamsul Bahar Bin Abdul Kadir V Rhb Bank Bhd And Another Appeal [2015] 4 MLJ 1
  • Re Lim Szu Ang; V Ex P Kewangan Utama Bhd [2005] 7 MLJ 487
Back to Latest Legal Updates

Recent Post

CIVIL PROCEDURE – STRIKE OUT UNDER ORDER 18 RULE 19(1)(A),(B) RULES OF COURT 2012 – EXTENSION OF TIME APPLICATION

In Badan Pengurusan Subang Parkhomes v Zen Estates Sdn Bhd [2025] MLJU 3591, the High Court reaffirmed that non-compliance with Order 37 Rule 1(5) of the Rules of Court 2012 does not automatically invalidate assessment of damages proceedings. The Court held that procedural rules must be read with the overriding objective of ensuring justice, and that the six-month time limit to file a Notice of Appointment is directory, not mandatory. Finding no prejudice to the defendant and noting active case management by the plaintiff, the Court dismissed the developer’s strike-out bid and allowed an extension of time for assessment to proceed. The decision underscores the judiciary’s commitment to substantive fairness over procedural rigidity in post-judgment proceedings.

Read More »
16 11 月 ,2025 尚無留言

TORT – PURE ECONOMIC LOSS BAR REAFFIRMED: MMC LIABLE FOR NEGLIGENCE BUT PROTECTED FROM LOST PROFIT CLAIMS

In Asia Pacific Higher Learning Sdn Bhd v Majlis Perubatan Malaysia & Anor [2025] MLJU 3144, the High Court awarded over RM2 million in damages against the Malaysian Medical Council (MMC) for negligence, breach of statutory duty, and misfeasance during its accreditation of Lincoln University College’s medical programmes. While the court allowed direct financial losses such as survey costs, it barred claims exceeding RM550 million for lost profits, reaffirming the Federal Court’s rulings in Steven Phoa and UDA Holdings that pure economic loss is not recoverable from public or statutory bodies. The second defendant was further ordered to pay RM100,000 in exemplary damages for acting with targeted malice, marking a rare personal liability finding against a regulatory officer.

Read More »
16 11 月 ,2025 尚無留言

ERINFORD INJUNCTION – COURT OF APPEAL CLARIFIES: EX-PARTE ERINFORD INJUNCTIONS ARE THE EXCEPTION, NOT THE RULE

In Edisijuta Parking Sdn Bhd v TH Universal Builders Sdn Bhd & Anor [2025] 5 MLJ 524, the Court of Appeal clarified that ex parte Erinford injunctions at the appellate stage should only be granted in truly exceptional circumstances where giving notice would defeat the purpose of the order. Wong Kian Kheong JCA held that, under rule 50 of the Rules of the Court of Appeal 1994, such applications should generally be heard inter partes to ensure fairness and prevent abuse. Exercising powers under section 44(1) of the Courts of Judicature Act 1964, the Court granted a conditional interim Erinford injunction pending appeal, fortified by a RM200,000 deposit and an undertaking to pay damages. The ruling provides clear guidance on balancing urgency, procedural fairness, and judicial efficiency in appellate injunctions.

Read More »
16 11 月 ,2025 尚無留言

TOTAL FAILURE CONSIDERATION – FEDERAL COURT OVERRULES BERJAYA TIMES SQUARE: TOTAL FAILURE OF CONSIDERATION REDEFINED

In Lim Swee Choo & Anor v Ong Koh Hou @ Won Kok Fong [2025] 6 MLJ 327, the Federal Court unanimously overruled Berjaya Times Square Sdn Bhd v M Concept Sdn Bhd and clarified that the doctrine of total failure of consideration applies only to restitutionary relief, not to contractual termination. The Court held that the correct test is whether the promisor has performed any part of the contractual duties in respect of which payment is due, adopting Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574. Finding that the appellants had partly performed their obligations and the respondent had derived benefits, the Court rejected the respondent’s claim for restitution and restored the appellants’ contractual claim. The landmark decision restores clarity between contract and restitution, reinforcing commercial certainty in Malaysian law.

Read More »
16 11 月 ,2025 尚無留言

CONTRACT (BILL OF LADING) – NO DUTY TO DETECT FRAUD: COURT CLEARS MAERSK OF LIABILITY FOR FALSE CONTAINER WEIGHTS

In Stournaras Stylianos Monoprosopi EPE v Maersk A/S [2025] 2 Lloyd’s Rep 323, the English Commercial Court held that carriers are not liable for fraudulent misdeclarations by shippers where bills of lading are issued for sealed containers. The Court ruled that Maersk had no duty to verify or cross-check declared weights against Verified Gross Mass (VGM) data under the SOLAS Convention, as its obligation under the Hague Rules extended only to the apparent external condition of cargo. However, the judgment signals that a limited duty of care could arise in future where a carrier is put on notice of fraud. For now, carriers may rely on shipper declarations, but consignees must exercise commercial vigilance and due diligence when relying on bills for payment.

Read More »
16 11 月 ,2025 尚無留言

EXEMPLARY DAMAGES – STATUTORY BODY DUTY – DAMAGES – OBTAINING APPROVAL

In Big Man Management Sdn Bhd v Tenaga Nasional Bhd [2025] 5 MLJ 290, the Federal Court reinstated nearly RM3.56 million in special damages and awarded RM100,000 in exemplary damages against TNB for wrongfully disconnecting electricity to an ice factory. The Court ruled that “strict proof” of special damages does not mean a higher burden beyond the civil standard of proof and affirmed that TNB, as a statutory monopoly, breached its statutory duty by using disconnection as leverage to collect payment. The judgment underscores that public utilities cannot misuse statutory powers, and consumers wrongfully deprived of essential services may be entitled to punitive remedies in exceptional cases.

Read More »
16 11 月 ,2025 尚無留言
zh_TWZH
en_USEN ms_MYMY zh_TWZH
× 联系我们