Reading Law

You’re working and earning a multi thousand ringgit salary. You’re on top of the world and feel that you can buy whatever you want. You have expensive taste, so you buy expensive cars, drink Starbucks every day, dress fancy, look fancy, take herbs, botox, the works! Then, recession hits! You lose your job. Those credit card bills become due, but you can’t pay! Soon you get letters of demand from the banks, the letters culminate on fine day into what is called a “Bankruptcy Notice”, and this notice seems so important its served on you personally. You read it and see an itemised account of what you owe with a demand that you pay up within 7 days, or else a “Bankrupcty Petition” would be pleaded against you in court. Those days pass. The very next day the bailiff comes and serves on you a “Bankruptcy Order” and then takes all your property, your home, and you are left, desperate and broke, with nothing.

This article attempts to set out the processed involved when bankruptcy is resorted to in the enforcement of judgments in Malaysia. Written with an emphasis on the debtor (who are, after all the majority of those involved in bankruptcy cases) the starting point in an execution involving bankruptcy up to the granting of a Bankruptcy Order will be laid and discussed. Reference will be made in particular to the provisions of the Bankruptcy Act 1967, being such an Act governing insolvency of the individual in Malaysia. Small scale references to the Debtors Act 1957 would also be made as well.

On with the discussion. The Bankruptcy Act 1967, or Act 360 of the Laws of Malaysia, came into force on 30 September 1967. The Act follows the approach of the repealed English Bankruptcy Act 1914 in the regulation of individual insolvency matters. The British rewrote that law in their own jurisdiction with the passage of the Insolvency Act in 1986, which simplified the whole process a great deal, much to the delight of their creditors. Here in Malaysia however, the old approach remains.

The whole process begins when a would be debtor commissions what is called an “Act of Bankruptcy”. This act takes the forms proscribed under section 3(1) of the Act. A cusory glance at these reveal that it is mostly common sense doings, such as attempting to transfer property to evade the payment of debt, the intentional delaying of creditors, the failure of the officer fails to find any property of his to seize in order to satisfy such debt, etc, but the most common relied upon could be none other then 3(1)(i), where a final judgment, together with a bankruptcy notice, is served upon the debtor, and the debtor fails to pay the quantified amount therein within 7 days (excluding the day of service of the notice vide Re Fadzil Bin Othman [1994] 2 MLJ 474). Should such days pass without the debtor doing anything, then he has committed an Act of Bankruptcy. He can avoid this by  filing a claim for a counterclaim, set-off or cross demand. A counterclaim and set-off is a claim against the creditor for something that could not be established during the trial which led to the final judgment (more on this later, defined by Order 15 rule 12 of the Rules of the High Court 1980) whereas the cross demand is of such a nature that it equals or exceeds the amount of the judgment debt (Re a Bankruptcy Notice (1934) Ch 431). For these to succeed it must be quantified first as held in Sovereign General Insurance Sdn Bhd v Koh Tian Bee [1988] 1 MLJ 304 and secondly as held in Re A Debtor [1983] 3 All ER 545 it must be put forward in good faith and have a reasonable probability of success.

Thereafter a creditor would present before the High Court what is known as a Bankruptcy Petition. This is a petition to ask the Court to ajudicate that the debtor has failed to pay his debts and should therefore be made a bankrupt. Upon receipt of such a petition, the court would grant what is called a Recieving Order (that is an order that all properties of the debtor be vested in the Director General of Insolvency) and an Ajudicating Order that deems the debtor to be a banktrupt. The two orders together are known as a Bankruptcy Order. To know more about these Orders and who the Director General of Insolvency is, stay tuned for the next part of this series on bankruptcy.

Mooting, I admit, is not my forte. Based on the competitions the faculty organises, my friend and co-blogger, Alistaire, would be the maestro when it comes to the written submission. So, this entry is based on my experience taking it as a subject.

Essentially, mooting is an on-hands role play at the appellate level. You and your partner/teammate are to argue your case before a judge (the Moot Master/Mistress). Unlike mock trials, your arguements are based on facts that have already been established viz the mooting question. What usually happens is you are given a mooting question, either as a consequence of entering a mooting contest, or having to set for a mooting paper that particular semester. The question would normally be a judgment of a court at first instance that is, when the facts have already been pleaded and established, and the judge of that level would have already made a decision on such facts based on the law he or she would have thought correct. The reason why it is on appeal is obviously because one of the parties to the action think the judge wrong, but wrong on the law he or she would have applied, not the facts!

An abstract example would be a case where facts A, B and C exist, and facts B and C had been considered material when the judge made his conclusion on the laws applicable, conclusion X. One of the parties would beg that the conclusion should not have been conclusion X but conclusion Y. Or one of the parties might want to point out that fact A is indeed material as well. That is how mooting works.

A more applied example would be, say, in an action for defamation. Lets say that the defendant called the plaintiff something in the like of “Not only is he a liar, but he is so fat he could roll over the grand canyon and get stuck” and the judge awared for the plaintiff on both counts of calling him a liar (which was found false) and also that he is fat so he could get stuck in the grand canyon. The plantiff might appeal admitting the first fact (ie calling him a liar) but then might wish to point out that the second fact is immaterial because insults are not to be taken as defamatory. Defamation is essentially about postulating a fact knowingly believing it to be false, and spreading such a fact.

In a moot, you argue based on the law to be applied. A simple dispute would be over, say, an exclusion clause, and whether it would be applicable in the dispute. The fact that the defendant had caused damage to the plantiff is quite plain, and neither party would dispute it, but the defendant would wish to rely on such a clause to absolve all and sundry his liability towards the plaintiff, while the plaintiff for obvious reasons would wish to argue that such a clause would not be applicable.

Having dispensed with that, there are a few salient points to consider when you take part in a moot. They are as follows.

1. Dress appropriately. A typical black suit and tie for the lawyer, i.e. the works, if you will, and black sparkly shoes to boot. Looking smart in the courtroom makes a difference since everyone likes a looker.

2. Mind your courtroom manner! Mooting isn’t a debate. You don’t shout your opponent down, you make humble submissions before a judge. “Being officers of the court, you are basically the judge’s slaves” is what one UiTM lecturer once said to bring the point home. Nicities such as “May it please this Court…”, “Much obliged” and so on make for good presentation marks on the scoreboard. 

3. Use correct pronounciation. The case of Donoghue v Stevenson [1932] AC 562 for example, is pronounced “The case of Donoghue and (never ever “versus”!) Stevenson, reported in the year nineteen thirty two in Appeal Cases at page five hundred and sixty two”. It may be a bit of a mouthful, but that is how things are. If its a criminal case, say like PP v Ibrahim it would be pronounced “Public prosecutor against Ibrahim”. If the year is in rounded brackets as opposed to square brackets, like (1932) instead of [1932], you substitute the phase “reported in the year…” with “decided in the year…”.

4. Have a good grasp of the legal principles involved. You don’t have to remember facts of authorities in detail, but do understand the principles underlying them. This is useful when the judge asks you questions (and believe me he will) that might attempt to trick you. For example, the simple principle that the tort of nuisance applies only in relation to damage to land use and not to injuries to the person once saved my friend Alistaire when the judge asked him whether, if he won (he was representing the plaintiff), damages could be awarded to his client based on the fact that the client had sustained personal injuries. 

5. And last but not least, be confidant! The courtroom is sort of like a tennis feild, and you are playing tennis with the other side with the judge as the referee. Never be afraid to postulate your take on the issue, that is, nicely, of course! Confidence is not arrogance, and know where the line is drawn between the two. If you keep this and what has been said above in your brain at all times, most likely you would be coming out of the court smelling like a rose, Ally McBeal style!

In an ideal world, you can expect all relevant details and information to be disclosed to you. Be it from your client, employer or the exam papers. Also, in an ideal world, you can expect the cases and problems you need to address are all clear cut and purely academic. But in that ideal world, wouldn’t it be boring? As a Law student, a skill which you should acquire in 3-4 years of legal education and training is this: reading between the lines.

Reading between the lines?

Imagine you, as a client, talking to your lawyer. Would you actually disclosed every detail? Example you’re asking for divorce. Will you tell what on earth were you doing with the other person – who is not your spouse – in your birthday suit at 3 am in the morning at a cheap hotel? Maybe your account is not meant to conceal things. Another probability is that you would forget certain details. Perhaps you were drugged before you were dragged to the hotel.

Sometimes, the things that aren’t explicitly mentioned are critical to your case. These small insignificant details, you thought, would have no effect. Sorry to say, in many a times, your overlooking of these information could result in your own loss.

Let’s be practical on the subject, shall we?

Case law. You are asked to read Donoghue v Stevenson or Re Webster. Next tutorial class, you are to present it and submit a report. Alternatively, you were assigned Stephen Kalong Ningkan and are asked to prepare a case brief/report. What do you do? How can you tell an argument was from the respondent and the other from the appellant?

If you’ve opened up a case law, you would know that the details therein are: case name, keywords, summary, judgment. Yes, the lawyers representing each party are named as well. But you do not have ‘arguments by the plaintiff’ or ‘defendant’s submission’. Yes, again, some judges highlight who said what. But what if they did not?

Here’s where your ‘reading between the lines’ skill comes in.

Another illustration, a statute. A particular clause says so-so-and-so are prohibited? But does it also mean that not-so-and-so are all permitted? In your first year, you would be exposed to the rules of interpretation (i.e. Golden rule, mischief rule, literal rule, hybrid, etc). But the apply these you still need to know: what is this person not telling me but can be deduced – not assumed – from this scenario?

Why not ‘assumed’? A fatal mistake many do over and over again is defending their case based on pure assumption. When you deduce, you have a concrete evidence based on the scenario. When you guess, you are shooting in the dark. Personally, I don’t want my lawyer to d the later. It is a sure way to fail.

Another thing you should consider are the circumstances surrounding the problem. Remember, honour killing may be illegal and inhumane in some parts of the world. In a different part, it may be the best option. In cases such as defamation, you cannot assume that the parties involved grew up and are trained in England or Kuala Lumpur. Your clients can be from Ulu Kapit and Ulu Baram for all we know in real life. These circumstantial informations should be deduced and be used.

Now, let’s talk exam papers, shall we?

In the Finals, the information provided in the question paper are all relevant and meant to show something. Use it, manipulate it but do not resort to assumption unless you can deduce. Deduce, again, a la Sherlock Holmes. No one said the Legal Studies/Law programme was an easy, trouble free programme. :-p

Did you know that extra marks are allocated if you can detect the ‘hidden’ issues? Consult your lecturer or tutor for more details. Each subject has different approaches.

When you’re in UiTM, you will do the Literature Appreciation subject in your 4th Semester. Use this opportunity to be critical of literature. It’s a good foundation to reading between the lines.

Selling promises? Can promises be traded at all? Is there such a thing, or are we just pulling your leg?

Nah, surely jest wouldn’t be appropriate here. This is a law blog, a serious blog after all. As is the topic at hand.

 What is to be talked about here is actually the West Malaysian land law concept of jual janji (literally to sell a promise) however what is referred to here is not promises but security transactions involving land. Evolving from Malay custom dating back to the 19th century (Judith Sihombing),  jual janji involves giving land as security to secure a loan. Under this concept, the borrower transfers his ownership of land to the lender, in exchange for loan as a consideration, and holds that land pending repayment. The lender is also entitled to profits of the land during the loan tenure. In the event the borrower defaults, the lender becomes absolutely entitled to the land in question, making the transaction a jual putus (“severed” sale).

 The elements of this phenomenon are that there firstly must be a lender and a borrower, and that they intend to conclude a loan and use land as security. Then the land must be transferred to the lender. The lender takes proceeds of the land pending repayment of the loan amount by the borrower, and the lender returns the land to the borrower upon full repayment of the loan. No documentation or registration takes place at all, making the whole process bureaucracy-free. However, with the enactment of the National Land Code 1965 in West Malaysia, jual janjis are now executed in the form of collateral agreements. The process, some scholars argue is akin to that of a common law mortgage.

 Problems however arise when disputes over these Malay customary transactions are litigated before the Malaysian courts. Is it a pure contract of sale (ie law of contract should govern it) or is it a customary security transaction? If the former, then time is of essence and the borrower loses the land upon failure to pay within the stipulated period. Not so if the latter.

One view, the most dominant I might add, by the Malaysian courts has to regard such transactions as contracts of sale. This approach is illustrated in the leading authority on the issue, Haji Abdul Rahman & Anor v Mohamed Hassan (1917) AC 209 (PC). In this case a borrower repaid his outstanding amount, but not within the agreed time period. The court held that transactions such as these were contracts of sale, and since time was of the essence in contracts the borrower was no longer entitled to have his land returned to him. Jual janjis were not mortgages since the only mortgages recognised in Malaysia were charges, or liens under the National Land Code 1965. A slap in the face for West Malaysian native land customs, it should be observed. This case was approved in other cases such as A Kanapathy Pillay v Joseph Chong (1981) 2 MLJ 117 (FC) where Salleh Abbas FJ said there are no equitable rights arising after expiry of time under “a contract”.  An exception exists however. If parties who enter into a contract do not perform their duties as enshirined within, there could be breach of contract, say, for example where the conduct of the lender himself caused the late repayment of the borrower. One case in which this situation arised was the case of Ismail Haji Embong v Lau Kong Han (1970) 2 MLJ 213 where the period for repaying had expired, but the lender extended the period subject to a $40 charge. The court held that the borrower was entitled to his land back.

 There are some hopeful cases where the origin of jual janjis as a Malay land custom are respected. In one such case, Yaacob bin Lebai Jusoh v Hamisah Bte Saad (1950) 1 MLJ 255 (CoA) the plaintiff sold land to the defendant and later the parties entered into an agreement whereby the defendant would resell the said land back to the plaintiff within 3 years, and that such an agreement would be null and void had this period lapse, and so it did. The judges, Jobling J and Briggs J held that time did not matter, as it was a mortgage ie a jual janji. It should be pointed out at this point though, that this is a pre-National Land Code case. However, cases closer to the present such as Abdul Hamid bin Saad v Aliyasak Ismail (1999) 1 AMR 105 and Hatijah bte Rejab v Abdullah bin Saad (2004) 2 AMR 665 point to a resergence of respect for the Malay custom, notably by the ruling of Aluddin Sheriff J in the former. This development is to be welcomed, for surely such a unique, bureaucracy-free way of affecting transactions should be allowed to continue and make its mark as a unique feature of the land law of our proud nation, Malaysia.