PEMIUTANG PENGHAKIMAN MALAYAN BANKING BERHAD PENGHUTANG PENGHAKIMAN SOO CHOON LAI

Case Significance

Confirms that a bankruptcy notice and creditor's petition stand where the underlying judgment in default is unstayed and a set-aside application has been dismissed, and that interest conforms to the compound-interest terms of that judgment.

This High Court decision in the Commercial Division at Kuala Lumpur concerns appeals in bankruptcy proceedings against a Senior Assistant Registrar's dismissal of applications to set aside a bankruptcy notice and a creditor's petition. The judgment creditor, Malayan Banking Berhad, had obtained a judgment in default against the judgment debtor in the Sessions Court in 2019 and subsequently issued a bankruptcy notice and a creditor's petition. The judgment debtor's applications to set aside the bankruptcy notice and creditor's petition had been dismissed by the Senior Assistant Registrar, and the debtor appealed. The two grounds advanced were whether the bankruptcy notice and creditor's petition could be challenged on the basis of a pending application or appeal to set aside the underlying judgment in default, and whether the amounts claimed, calculated on the basis of compound interest, were correctly calculated. On the first ground, the court noted that the debtor's application to set aside the judgment in default had already been dismissed in the Sessions Court, and there was no stay of that judgment; a merely pending challenge or appeal to the underlying judgment did not undermine the bankruptcy notice and creditor's petition, which stood on a judgment that remained enforceable. On the second ground, the court examined the interest calculations and held that, although the debtor contended interest should be simple interest at a flat rate, the judgment in default itself provided for compound interest, so the amounts stated in the bankruptcy notice and creditor's petition were correctly based on compound interest in accordance with the judgment, and the debtor's simple-interest calculation was wrong. Both grounds accordingly failed, and there was no basis to set aside either the bankruptcy notice or the creditor's petition. The judgment is a useful statement that a bankruptcy notice and creditor's petition stand where the underlying judgment is unstayed and the sums claimed conform to the terms of that judgment.