Enforcement of Judgment in Malaysia

Introduction

Most of the people think that when they have won the case, they will automatically be paid and that is the end of the case. Unfortunately, no, it is not. If the other side (judgment debtor) does not voluntarily pay, all you (judgment creditor) have is a piece of paper that says you are entitled to payment. In such an event, do not sit on it and you may proceed to enforce or execute the judgment to recover the outstanding sum.
We will look at some of the common methods of enforcement below.

1. Garnishee proceedings

   Garnishee proceedings is one of the simplest and speediest way to recover the judgment sum if you come across any information of the judgement debtor’s bank account. You can make an ex-parte application to move the court to make a garnishee order directing the bank/garnishee to pay you the judgment sum.
   However, there are limitations to garnishee proceedings which the court may not allow the money to be garnished and some of the limitations are money held in joint-account and money held in trust for another person.

2. Judgment Debtor Summons

   Upon the judgment creditor’s application, the court can compel the judgment debtor to appear in court for examination on oath. If the judgment debtor is absent, an order of arrest can be issued to bring him/her before the court.
   During the examination, the judgment debtor needs to provide information of his/her assets and the court will allow the judgment debtor to settle the judgment sum by lump sum or instalments. However, if the judgment debtor fails to comply with the court order, he/she could be arrested and imprisoned.
   The effectiveness of judgment debtor summons depends on the cooperation of the judgment debtor.

3. Writ of Seizure and Sale

   If you have knowledge of the judgment debtor’s valuable property (movable or immovable property), you can apply to the court to make an order of seizure and sale. A warrant of seizure and sale authorises the bailiff to seize and sell the valuable property by public auction to satisfy the judgment sum.
   However, there are items which cannot be seized such as the judgment debtor’s clothing, personal belongings or tools of trade which enables him/her to earn a living.

4. Bankruptcy proceedings

   Following the approval of the Insolvency (Amendment) Bill 2020, the minimum bankruptcy threshold has been raised to RM100,000.
   Bankruptcy proceeding is one of the most effective form of enforcement proceedings against an individual who refused to pay judgment sum. The judgment debtor is deemed to commit an act of bankruptcy if he/she fails to respond to the bankruptcy notice within seven days.
   Once he/she is adjudged bankrupt, all his/her assets will vest with the Director General of Insolvency (“DGI”). The DGI will administer the assets by selling or disposing of the assets and the sale proceeds will be distributed among the creditors, with priority to be given to the secured creditors, as compared to unsecured creditors.

5. Winding up proceedings

   Winding up proceedings is very similar to bankruptcy proceedings but it applies to company only. Recently, it was announced that the statutory demand threshold for winding up petition will be permanently kept at RM50,000.00.
   Before filing of a winding-up petition against a debtor company, the judgment creditor would first issue a statutory notice of demand pursuant to Section 466(1)(a) of the Companies Act 2016. If the debtor company neglects to pay the judgment sum within 21 days of being served with the said notice, the judgment creditor can apply to the court to wind up the debtor company.
   As soon as the winding-up order is made by the court, a liquidator will be appointed by the court to take over the company. The liquidator will manage the company’s assets including selling the assets and then distributing the proceeds among the creditors, with priority to be given to the secured creditors, as compared to unsecured creditors.

Conclusion

Apart from the above, there are still various other methods of enforcement such as charging order, order of committal and prohibitory order. It is important to consider which enforcement method to proceed dependent upon the circumstances of the judgment debtor.
If you have any questions or require any additional information, please contact our lawyer that you usually deal with.

This article is written by 

Derek Chin Tze Qi
Associate, Low & Partners