Federal Court Clarifies Liability Of Two Or More Judgment Debtors Where The Words "joint And Several" Are Not Stated In The Judgment

• Published date: 24 September 2021
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: SKRINE
• Author: Ms Karen Tan Wee Sean

"In summary therefore, unless a contrary intention is expressed in the contract, all joint contracts effectively impose a full liability for the debt on each of the promisors ... Thus, where the debts are jointly incurred, each promisee is liable for the whole amount ..." - Per Nallini Pathmanathan FCJ

The Federal Court in a unanimous decision delivered by Nallini Pathmanathan FCJ (Rohana Yusuf PCA and Azahar Mohamed CJM concurring) in Lembaga Kumpulan Wang Simpanan Pekerja v Edwin Cassian A/L Nagappan @ Marie [2021] 7 CLJ 823 allowed an appeal by the Employees' Provident Fund Board ("EPF Board") and reversed the decisions of the courts below which held that omission of the phrase 'jointly and severally' in a court order against two or more judgment debtors means that each debtor would only be liable for a portion of the judgment sum, proportionate to his share interest or obligation. The decision is significant as it is the first reported case whereby the apex court cleared the air on the issue of liability between two or more judgment debtors.

Key Points

1. The liability of the judgment debtors is both joint and several by operation of law under Section 44(1) of the Contracts Act 1950 The effect of Section 44(1) of the Contracts Act 1950 is that unless a contrary intention is expressed in the contract, all joint contracts effectively impose a full liability for the debt on each of the promisors.
2. So long as a judgment debt remains unrealised, the judgment creditor is entitled to proceed against one or any number of judgment debtors to secure the performance of an obligation in its entirety.
3. Merely inserting the word 'jointly' in a consent judgment would not suffice to halve liability as there must be express words to that effect to state that the liability of the joint promisors is to be borne in equal proportions.

Brief Facts

The dispute concerns a consent judgment entered between the parties, where each of the three defendants, comprising the company and its two directors, agreed to pay the EPF Board the arrears in employer contributions ("Consent Judgment"). However, the Consent Judgment did not include the phrase that the three defendants were 'jointly and severally' liable for the sum stated in the Consent Judgment. After the defendants failed to comply with the Consent Judgment, the EPF Board commenced bankruptcy proceedings against the Respondent alone. The Respondent applied to set aside the bankruptcy notice and the creditor's petition.

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