PEMIUTANG PENGHAKIMAN EC PILES SDN BHD PENGHUTANG PENGHAKIMAN CHANG KIAN CHIANG

PEMIUTANG PENGHAKIMAN EC PILES SDN BHD PENGHUTANG PENGHAKIMAN CHANG KIAN CHIANG

The court held that the Guarantee & Indemnity executed by the judgment debtor created primary, independent liability (indemnity/principal debtor clause) and therefore sections 5(3)(b) and 5(4) of the Insolvency Act 1967, which protect pure guarantors until enforcement against the principal debtor is exhausted, did not apply. The debtor had constructive notice via valid substituted service and the omission to cite statutory provision in the intitulement did not prejudice the creditor. Accordingly the debtor's application to set aside the creditor's petition was dismissed.

Citation
JA-29NCC-518-09/2022 (Mahkamah Tinggi)
Parties
Judgment Creditor / Petitioner: EC Piles Sdn Bhd; Judgment Debtor / Applicant (to Set Aside Petition): Chang Kian Chiang
Court
High Court
Jurisdiction
Malaysia
Judgment Date
27 April 2023
Case Number
JA-29NCC-518-09/2022 (Mahkamah Tinggi)
Procedural Posture
Bankruptcy / Insolvency / Interlocutory Application to Set Aside Creditor's Petition (application Heard on Merits)
Outcome
Application by judgment debtor to set aside creditor's petition dismissed
Legal Topics
Guarantee Vs Indemnity, Leave to Commence Bankruptcy (s.5(3) Insolvency Act 1967), Exhaustion of Remedies Against Principal Debtor (s.5(4)), Substituted Service, Procedural Pleading Requirements
Source Language
Malay/English
Insolvency Bankruptcy Contract Law Civil Procedure Guarantee Vs Indemnity Leave to Commence Bankruptcy (s.5(3) Insolvency Act 1967) Exhaustion of Remedies Against Principal Debtor (s.5(4)) Substituted Service +1 more

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Parties

EC Piles Sdn Bhd

Judgment Creditor / Petitioner

Chang Kian Chiang

Judgment Debtor / Applicant (to Set Aside Petition)

Procedural Posture

Bankruptcy / Insolvency / Interlocutory Application to Set Aside Creditor's Petition (application Heard on Merits)

Legal Issues

  1. 1 Whether the debtor's application to set aside the creditor's petition was premature because the petition was not served when application filed
  2. 2 Whether failure to cite s.5(3) Insolvency Act 1967 in the intitulement renders the application fatal
  3. 3 Whether creditor was required to exhaust enforcement remedies against the principal borrower before proceeding against the guarantor

Ratio Decidendi

The court held that the Guarantee & Indemnity executed by the judgment debtor created primary, independent liability (indemnity/principal debtor clause) and therefore sections 5(3)(b) and 5(4) of the Insolvency Act 1967, which protect pure guarantors until enforcement against the principal debtor is exhausted, did not apply. The debtor had constructive notice via valid substituted service and the omission to cite statutory provision in the intitulement did not prejudice the creditor. Accordingly the debtor's application to set aside the creditor's petition was dismissed.

Court Disposition

Application by judgment debtor to set aside creditor's petition dismissed

Orders

  • Application dismissed
  • Judgment debtor to pay costs of RM1000 to judgment creditor, subject to taxation (fi alokatur)