RE CHUA TIN HONG

EX PARTE CASTROL (M) SDN BHD

[1997] 3 CLJ 174
HIGH COURT MALAYA, MELAKA
AUGUSTINE PAUL JC

Summary of the case

A receiving order and an adjudicating order had earlier been

made against one Chua Tin Hong (the bankrupt) on 22 March
1991 upon the petition of Castrol (M) Sdn. Bhd. (Castrol). On
4 September 1991, the bankrupt transferred a piece of land (the
land) of which he was the registered proprietor to his nephew
(the 1st respondent) without consideration. On 4 October
1994, the 1st respondent transferred the land to the 2nd
respondent for a consideration of RM79,964.
On 28 February 1996, the Official Assignee (the applicant)
applied to the SAR and obtained a declaration that the transfer
of the land, from the bankrupt to the 1st respondent and from
the 1st respondent to the 2nd respondent, was a voluntary
settlement under s. 52 of the Bankruptcy Act 1967 (the BA)
and was void against the applicant.
The SAR held that: (i) the transaction between the bankrupt and
the 1st respondent was void ab initio for noncompliance with s.
38(1)(a) of the BA; (ii) the transaction between the bankrupt and
the 1st respondent was void under s. 52 of the BA as no
consideration was involved; and (iii) as the transaction between
the bankrupt and the 1st respondent was void, the transaction
between the 1st respondent and the 2nd respondent was also
void.

Issues of the case

Courts Decision

Whether bankrupt may still deal in his land after being

adjudged a bankrupt

Validity of transaction - National Land Code 1965, s. 349

Whether property of bankrupt vested in Official Assignee

Operation of s. 24(4) of Bankruptcy Act 1967

1.

The SARs reliance on s. 38(1)(a) of the BA was

misconceived. The plain meaning of the word action in s.
38(1)(a) of the BA is civil action. Thus, the word action in
s. 38(1)(a) of the BA is confined in its operation to civil
proceedings in court and not to a conveyance of property.

2.

Section 52 of the BA was also inapplicable. Section 52 of the

BA is restricted in its application to settlements made prior to
a settlor being adjudged a bankrupt. In the present case, the
land was transferred after the act of bankruptcy of the

bankrupt. Therefore, the SARs reliance on s. 52 of the BA

could not be sustained.
3.

Section 53(B)(3) of the BA was also activated in favour of the

2nd respondent. The fact that the 2nd respondent had given
valuable consideration for the purchase of the land and had
acted in good faith brought him within the protection
contemplated by s. 53(B)(3) of the BA.

4.

Section 24(4) of the BA must be analysed in the light of s 349

of the National Land Code 1965 (the NLC) to ascertain
whether the land had vested in the applicant. Section 349 of
the NLC provides that no land shall vest in the Official
Assignee until it has become registered in his name. Thus, s.
24(4) of the BA must be interpreted as being qualified by s.
349 of the NLC in so far as land is concerned. The registered
title of a bankrupt does not vest in the Official Assignee until
a transmission is registered in the official capacity of the
latter; if a bankrupt transfers his interest in land to a person
who registers the transfer before any transmission is
registered by the Official Assignee, then the bankrupts
interest will, notwithstanding his bankruptcy, pass to that
person.

5.

The applicant would be entitled to proceed under s. 340(2) of

the NLC if he could bring himself within the requirements of
that section.

6.

In order to ensure that a registered proprietor of land who has

been adjudged a bankrupt does not deal with the land before
it is vested in the Official Assignee, the Official Assignee
ought to caveat the land under s. 323 of the NLC.

[2nd respondents appeal allowed.]