THIYAGARAJAN A/L MPL YEGAPPAN v CIMB BANK BERHAD

Case Significance

Confirms that an undischarged bankrupt must obtain the sanction of the Director General of Insolvency under section 38(1)(a) of the Insolvency Act 1967 before suing, and that the requirement cannot be circumvented by framing a property-preservation claim as an action for injury to the person.

This High Court decision concerns preliminary objections to several originating summonses brought by an undischarged bankrupt, heard together, and turns on the requirement in section 38(1)(a) of the Insolvency Act 1967 that a bankrupt obtain the sanction of the Director General of Insolvency before commencing legal proceedings. The plaintiff, acting in person, had brought this originating summons against a bank seeking, among other things, an interim stay of separate proceedings the bank had filed, and a restraining order to stop what he characterised as defamation and harassment relating to a piece of land over which he stood as guarantor for loans. The court observed that the true object of the plaintiff's various actions was to preserve the land from being sold at auction in the enforcement of the security, and that the proceedings represented both the use and the misuse of the court's process to that end. The central legal question was whether the plaintiff, as an undischarged bankrupt, could maintain the action without first obtaining the required sanction. The plaintiff sought to bring himself within the recognised exception for actions concerning injury to the person of the bankrupt, but the court held that no form of words could, on its face, convert a claim that was in substance about preserving a property right into an action for injury to the person. Finding that the plaintiff had not secured the sanction of the Director General of Insolvency before commencing the originating summons, the court held him incompetent in law to bring the action, so that it was not maintainable. It stressed that the court must, as a matter of both fact and law, look to the true nature of an action rather than the label the litigant places on it, and that it could not condone attempts at deception or subterfuge designed to manipulate the process. The preliminary objection was upheld and the originating summons struck out. The judgment illustrates that the sanction requirement cannot be circumvented by the way a claim is framed.