Appellate Intervention And Section 33 Of The Insolvency Act 1967
Recently, the Court of Appeal in Quek Siew Eng v Malayan Banking Bhd [2023] 1 CLJ 884 held that the High Court Judge cannot summarily and arbitrarily convict a bankrupt under Section 16 of the Insolvency Act 1967 (the Act) without giving the bankrupt the right to be heard.
Consequently, the Court of Appeal highlighted that in a situation where a bankrupt has not committed any offence, the application to be discharged as a bankrupt shall be made pursuant to Section 33(1) and not under Section 33(4) of the Act.
Facts
Quek Siew Eng was adjudged a bankrupt in 2010 and applied for a discharge pursuant to Section 33(1) in 2019. He filed his statement of affairs within 21 days as stipulated in Section 16(2) and paid RM 200 a month to the Director General of Insolvency (DGI) since July 2010, which was later increased to RM 500 a month. Before he was made a bankrupt, he jointly owned a piece of land in Sandakan (the Land).
In the DGI’s statutory report, it was stated that the Appellant did not commit any offence under Sections 421, 422, 423 and 424 of the Penal Code. It was also stated that the Appellant was compliant with all directions issued by the DGI.
However, the Senior Assistant Registrar dismissed the Appellant’s application to be discharged as a bankrupt. This prompted the Appellant to appeal to the High Court Judge, who unfortunately affirmed the decision of the Senior Assistant Registrar and dismissed the Appellant’s appeal.
High Court Judge’s Findings And Decision
The High Court Judge’s dismissal of the Appellant’s appeal was premised, inter alia, on the following grounds:
(1) The Appellant failed to disclose his co-ownership of the Land in his statement of affairs which constitutes an offence under Section 16(1) and punishable under Section 16(3).
(2) The Appellant’s application to be discharged as a bankrupt should be pursuant to Section 33(4) as the Appellant had committed an offence under the Act by failing to disclose his co-ownership of the Land.
(3) Although the DGI’s statutory report did not show that the Appellant had committed any offence under the Act, the court was not bound by the DGI’s statutory report.
The Court Of Appeal’s Decision
Dissatisfied with the decision of the High Court Judge, the Appellant appealed to the Court of Appeal which allowed the appeal.
Based on the wordings of Sections 16(1) and 33(4) of the Act, the Court of Appeal held that the High Court erred to consider the following:
1) The Appellant’s failure to disclose his co-ownership of the Land was not an offence under Section 16(1) and punishable under Section 16(3). Section 16(1) only dealt with the Appellant’s duty to submit to the DGI a statement of affairs in the prescribed form verified by affidavit showing the particulars of his assets, debts and liabilities; and
2) The Appellant was never tried or charged for any bankruptcy offence. As such, the Appellant correctly applied to be discharged pursuant to Section 33(1).
The Court of Appeal held that Section 33(4) meant that a bankrupt must have been accordingly convicted of an offence that he was charged with by the DGI.
In arriving at this decision, the Court of Appeal relied on the following cases which were instructive in the interpretation of Section 33(4):
(i) In Development & Commercial Bank Bhd & Ors v. Loke Theen Fatt [2010] 5 CLJ 583, the court held that “committed” in Section 33(4) of the Bankruptcy Act 1967 meant that a bankrupt must have been charged in court by the DGI for that offence. Thereafter, for a bankrupt to be discharged, the application would be considered pursuant to Section 33(3) whereby the starting point would be the DGI’s statutory report which is prima facie evidence of a bankrupt’s conduct.
(ii) In Re Joshua Tan Pin Pin; Ex p William Jacks & Co (M) Sdn Bhd [2007] 3 CLJ 153, the court held that if a bankrupt had been convicted of a bankruptcy offence only then Section 33(4) of the Bankruptcy Act 1967 would be applicable.
Thus, it is clear that Section 33(4) was only applicable if the bankrupt is charged by the DGI for that offence and was convicted accordingly for that offence. Based on the facts of the Appellant’s case, the Appellant was not charged or convicted for any offence and this was supported by the DGI’s statutory report.
In this regard, the Court of Appeal held that the High Court’s finding that the Appellant had committed an offence under Section 16(1) without being charged in the first place was erroneous. Further, the Court of Appeal explained that the High Court Judge summarily and arbitrarily convicted the Appellant without providing the Appellant the right to be heard. Hence, in view that the Appellant had never been charged, tried or convicted of any offence, the Appellant had accurately applied to be discharged as a bankrupt pursuant to Section 33(1).
Conclusion
The position of the law as explained by the Court of Appeal is clear- an application to be discharged as a bankrupt pursuant to Section 33(4) is only applicable if a bankrupt is charged by the DGI for that offence and was convicted accordingly for that offence. If no offence is committed, the applicable provision for an application to be discharged as a bankrupt is Section 33(1).
In this case, the Court of Appeal carefully discerned the facts and reached a conclusion that there was insufficient judicial appreciation of evidence whereby the Appellant was not charged, tried or convicted of any offence. Thus, the proper way to make an application to be discharged was pursuant to Section 33(1). This in turn would mean that a court is in no position to arbitrarily conclude that a bankrupt is guilty of an offence notwithstanding the fact that he would have been convicted of an offence. Whilst the discharge of a bankrupt under Section 33 is subject to the court’s discretion, the DGI’s statutory report cannot be sidestepped. This Court of Appeal case clearly elucidates that a court of law has the duty to take into account the DGI’s statutory report as it is prima facie evidence of a bankrupt’s conduct. This decision also upholds the fundamental principles of natural justice and a bankrupt’s right to be heard.
8 May 2023