YURI ZAHARIN BIN WAHAB ANN JOO METAL SDN BHD

YURI ZAHARIN BIN WAHAB ANN JOO METAL SDN BHD

The Court of Appeal held that s.5(3)(b) of the Insolvency Act 1967 grants partial protection to all non-social guarantors regardless of whether the underlying liability is a loan or a trade debt; "borrower" in ss.5(5) and (6) should be read purposively as "debtor" (including trade debtors); leave under s.5(4) was required and, absent leave, the bankruptcy notice and creditor petition were properly set aside by the Senior Assistant Registrar and the High Court decision was overturned.

Citation
B-03(IM)(NCC)-3-01/2023 (Mahkamah Rayuan)
Parties
Appellant / Judgment Debtor: Yuri Zaharin bin Wahab; Respondent / Judgment Creditor: Ann Joo Metal Sdn Bhd
Court
IM
Jurisdiction
Malaysia
Judgment Date
13 August 2024
Case Number
B-03(IM)(NCC)-3-01/2023 (Mahkamah Rayuan)
Procedural Posture
Civil Appeal (bankruptcy) / Court of Appeal Judgment on Appeal From High Court
Outcome
Appeal allowed; High Court decision reversed; order of Senior Assistant Registrar reinstated
Legal Topics
Guarantor Protection, Leave to Commence Bankruptcy, Trade Debt Versus Loan, Interpretation of Insolvency Act S.5
Source Language
Malay/English
Insolvency Law Bankruptcy Civil Procedure Statutory Interpretation Guarantor Protection Leave to Commence Bankruptcy Trade Debt Versus Loan Interpretation of Insolvency Act S.5

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Parties

Yuri Zaharin bin Wahab

Appellant / Judgment Debtor

Ann Joo Metal Sdn Bhd

Respondent / Judgment Creditor

Procedural Posture

Civil Appeal (bankruptcy) / Court of Appeal Judgment on Appeal From High Court

Legal Issues

  1. 1 Whether s.5(3)(b) of the Insolvency Act 1967 requires leave before instituting bankruptcy proceedings against guarantors of trade debts as well as loan guarantors
  2. 2 Whether the terms "borrower" and "debtor" in s.5 should be read to include trade debtors
  3. 3 Whether the High Court erred in reversing the Senior Assistant Registrar's order setting aside the bankruptcy notice and creditor petition

Ratio Decidendi

The Court of Appeal held that s.5(3)(b) of the Insolvency Act 1967 grants partial protection to all non-social guarantors regardless of whether the underlying liability is a loan or a trade debt; "borrower" in ss.5(5) and (6) should be read purposively as "debtor" (including trade debtors); leave under s.5(4) was required and, absent leave, the bankruptcy notice and creditor petition were properly set aside by the Senior Assistant Registrar and the High Court decision was overturned.

Court Disposition

Appeal allowed; High Court decision reversed; order of Senior Assistant Registrar reinstated

Orders

  • Set aside the decision of the High Court which had reinstated the bankruptcy notice and creditor petition
  • Reinstate the Senior Assistant Registrar's order setting aside the bankruptcy notice and creditor petition against the appellant (judgment debtor)