CIMB BANK BERHAD v THIYAGARAJAN A/L MPL YEGAPPAN

Case Significance

Illustrates the vexatious-litigant jurisdiction under paragraph 17 of the Schedule to the Courts of Judicature Act 1964 being used to restrain repeated meritless proceedings, including the significance of an undischarged bankrupt litigating without the sanction required by section 38(1)(a) of the Insolvency Act 1967.

This High Court decision at Alor Setar concerns an application by a chargee bank to have a defendant declared a vexatious litigant under paragraph 17 of the Schedule to the Courts of Judicature Act 1964. The defendant had been a director, shareholder and guarantor of a company to which the bank had extended loans of RM12,500,000, secured by a charge over land owned by the company. The bank had obtained an order for sale in 2000, the company had later been wound up, and the defendant had been adjudged bankrupt in 2013 and remained an undischarged bankrupt, with the bank's proof of debt filed for more than RM29 million. Despite the order for sale, the bank had been unable to realise the land, and it contended that the defendant had habitually and persistently instituted proceedings without reasonable cause in order to obstruct its exercise of its rights as chargee. The court examined the three requirements identified in the authorities for a vexatious-litigant declaration and found them satisfied. Of particular significance was that, as an undischarged bankrupt, the defendant had instituted litigation without the prior sanction of the Director General of Insolvency required by section 38(1)(a) of the Insolvency Act 1967, and that the proceedings were frivolous and devoid of merit, amounting to no more than attempts to obstruct the lawful chargee from selling the land. The court was careful to tailor the relief to the mischief before it, confining the declaration to litigation touching the charged land rather than imposing a general bar on the defendant's access to the courts. The court accordingly declared the defendant a vexatious litigant in respect of the land, with the consequence that no further application concerning the land could be filed by him without the prior leave of the court, while making clear that the declaration did not affect his rights in unrelated matters. The judgment illustrates the use of the vexatious-litigant jurisdiction to prevent the abuse of process by repeated meritless litigation.