Computation of Time in Bankruptcy Proceedings

Syed Fadzil Alhabshi
Partner
E: syed@stwd.com.my

Fawza Sabila binti Faudzi
Associate
E: fawza@stwd.com.my 

There are often disputes in respect of whether public holidays and weekly holidays should be included or excluded in the computation of the 7-day period after service of a bankruptcy notice to determine the date on which an Act of Bankruptcy has been committed. The conflict stems from the reliance on different legislation in the method of computation of the 7-day period in s 3(1)(i) of the Insolvency Act 1967.

The Insolvency Act 1967 and Insolvency Rules 2017 do not provide any method of computation. However, rule 284 of the Insolvency Rules 2017 provides that in the event of any lacuna, the Rules of Court 2012 shall apply, mutatis mutandis. Reliance is therefore placed on Order 3 rule 2 of the Rules of Court 2012 which states that in calculating periods of 7 days or less, weekly holidays and public holidays are excluded from the calculation. This position was adopted in the case of Re Stephen Wong Leong Kiong; Ex Part HSBC Bank Malaysia Bhd [2005] 5 CLJ 504 (“The Weekend Excluded Position”).

On the other hand, sections 54(1)(d) and 105(d) of the Interpretation Act 1948 and 1967 (Consolidated and Revised 1989) (“the Interpretation Act”) only provide for the exclusion of weekly and public holidays for periods not exceeding 6 days. This position was adopted in the case of Re Dato Loh Fook Yen; exparte Malayan United Finance Bhd [1998] 3 MLJ 499 (“The Weekend Included Position”).

We recently had the opportunity to argue this matter before the Court of Appeal and Federal Court which both agreed that the Weekend Excluded Position method of computation is the correct method. The Court of Appeal, in its Grounds of Judgment in Bank Islam Malaysia Bhd v Gnasegar a/l G Vengadasamy [2023] 1 MLJ 50, found that there was a lacuna in the Insolvency Rules 2017 and rule 284 specifically provided for the application of Order 3 rule 2 of the Rules of Court 2012.

In this case, the High Court (which had preferred the Weekend Included Position) premised its decision on the basis that the Interpretation Act was principal legislation whilst the Rules of Court 2012 is merely subsidiary legislation. The Court of Appeal disagreed, and applied the legal maxim that a special provision of law is to be preferred over a general provision of law. To find otherwise would render the Order 3 rule 2 of the Rules of Court 2012 otiose.

The decision of the Court of Appeal was recently affirmed by the Federal Court on 7^th March 2023 vide Civil Appeal No.: 03-1-04/2022(P) wherein the Federal Court affirmed the applicability of the Weekend Excluded Position. Syed Fadzil Alhabshi and Fawza Sabila binti Faudzi acted for Bank Islam Malaysia Bhd in the High Court, Court of Appeal, and Federal Court.