At the end of every court trial, a judgment will be rewarded to the winning party. The losing party is now left with a list of orders for them to comply with and obey.
What if they refuse or fail to follow such an order made against them?
Can Court compel them to act as they were ordered to? The answer is, yes. The court has the power to enforce the judgment or order made upon the application of the winning party in a separate and fresh application known as execution and enforcement of the judgment.
The term execution and enforcement refer to the way the litigant can compel the obedience of the judgment or order against the other party.
A decision can be enforced as soon as the sealed judgment is extracted from the Registry of Court. Still, as provided in Section 6 (3) of the Limitation Act 1953, the judgment cannot be enforced after the expiration of twelve years from the date on which the judgment becomes enforceable and not from the date of the judgment. This was illustrated in Daud v Ibrahim where the court refused to allow the plaintiff to enforce an order of the magistrate to have the defendant transfer a piece of land to the plaintiff after twelve years from the date of the order on the ground that it was statute barred.
Now, let’s take a quick review of how a judgment can be enforced via a few modes of execution.
In case when the debt does not meet the minimum threshold required in the bankruptcy or winding up action, the plaintiff which is now known as the judgment creditor at this stage can file for the Judgment Debtor Summons against the judgment debtor to satisfy the amount owed to them.
Section 4 of Debtor’s Act 1957 rules that a judgment creditor is entitled to enforce an order made in their favour by summoning the debtor or the officer of the debtor, in case the decision was made against a corporation, to the court so their ability to repay the judgment debt due on them can be assessed through an oral examination by the judge.
By virtue of Order 48 of Rules of Court 2012, a notice of application and affidavit in support (Form 95) must be filled and filed before the court and when the leave is obtained, the court shall make an order to command the judgment debtor to attend the court for a hearing. The order must be served personally to the judgment debtor and the judgment creditor’s lawyer must provide sufficient proof of service. This is pertinent because essentially, the judgment debtor summons requires the debtor’s attendance in the court so they can be orally examined for their failure to repay the judgment debt. Upon the final stage of this action, the court will order the debtor to repay the debt by way of monthly instalments after a thorough assessment of their financial means.
The bankruptcy proceedings in Malaysia are governed under the Insolvency Act 1967. A creditor is entitled to enforce any final judgment or order which exceeds an amount of RM100,000 and above against the debtor via bankruptcy proceedings provided that he must first obtain the final judgment or final order in his favour.
After the pandemic hit worldwide, the threshold for the commencement of bankruptcy proceedings in Malaysia has been revised from RM50,000 to RM100,000. This was to provide a relief cushion for many individuals and enterprises who were badly affected by the pandemic and the economic crisis. The amendment was also vital to avoid the abundance of claims in the court.
To file a bankruptcy action, the judgment creditor may be an individual or a company and the Bankruptcy Notice can only be issued on a final judgment or order of a court. It can also only be issued if the judgment creditor is in a position to execute the judgment ie when the judgment obtained is yet to exceed the 6 years’ time limit. If this is the situation, then the creditor must apply for leave of the court before the bankruptcy can be filed against the debtor.
If the debtor is a registered company, the creditor may apply for a winding-up petition against the company. A winding-up is a process whereby the company’s assets are collected and realised by the Malaysian Department of Insolvency (MDI) in its capacity as the liquidator to pay off the debtor’s debts to the creditors.
By the Federal Government Gazette Notification No. 4159 dated 22 March 2021, the amount of indebtedness required to commence winding up proceedings under section 466(1)(a) has been fixed at RM50,000.00 with effect from 1 April 2021.
Order 46 Rules of Court 2012 listed three types of writs of execution. The first one is the Writ of Seizure and Sale. The writ of seizure and sale gave the power to the court’s bailiff to seize and sell the property of the judgment debtor to such an extent as is necessary to satisfy the judgment sum.
In a case whereby the court ordered the judgment debtor to deliver the vacant possession of land, or any premise and he failed to do so, the judgment creditor may apply for a Writ of Possession., which Order 45 rule 5 will apply. By Form 90, the bailiff may enter into the premise and take possession of the immovable property. The writ may include a provision for enforcing the payment of money which are usually rental arrears and legal costs for that purpose, the writ of possession will command a seizure and sale of any movable property of the defendant to satisfy the party of the monetary judgment.
Thirdly, a Writ of Delivery can be filed by the judgment creditor whereby a judgment or order has been granted for the delivery of any goods. By virtue of Order 46 rule 3 of Rules of Court 2012, an application for leave to issue any of the abovementioned writs of execution may be made by way of ex-parte application by a notice of application in Form 88. Ex-parte in this context means the application is made to the Court only, without the presence of the Judgment Debtor at the hearing.
If any third party is identified or known to be indebted to the judgment debtor, then the judgment creditor may file for an action of garnishment to seek a court order compelling the third party to directly pay the sum owing to the judgment debtor to the judgment creditor. This is known as garnishee proceedings.
It is commenced by obtaining an order in the form to show cause, which is an order to the third party known as garnishee in this action to appear before the court why he should not pay the judgment creditor the debt due from him to the judgment debtor.
Any bank accounts garnished by the Garnishee Order would have been frozen at this stage and the judgment debtor will be denied access to their monies. If no dispute is raised by the Garnishee or the judgment debtor, the court will order a Garnishee Order Absolute to direct the bank to release the amount owed directly to the judgment creditor.
Although it is not often the case, usually a winning part will always end up with only a judgment paper, therefore it is important to seek your counsel’s advice on which mode of execution is the most suitable to satisfy the judgment or order made.