Would Financial Impecuniosity be Considered in Committal Proceedings? And to What Extent?

by Lavinia Kumaraendran ~ 31 January 2019

Would Financial Impecuniosity be Considered in Committal Proceedings? And to What Extent?

An application for an Order of Committal can be made by one party (“the applicant”) in order to enforce an order of court that the other party (“the defendant”) has failed/refused to comply with, whether a payment of a monetary sum or an order requiring an act to be done. There are circumstances when the defendant may not have the necessary financial means to comply with the said order. Hence, the defendant may raise the defence of being financially impecunious in order to prevent themselves from being subject to an Order of Committal.

Below, the positions of various jurisdictions based on decided case law will be discussed with regard to the extent to which financial impecuniosity would be considered by the courts before allowing an application for an Order of Committal.

Malaysian case law on impecuniosity as a defence

The case of Lee Lay Ling v Goh Kim Nam (Cheah Pei Ching, co-respondent) addressed the position of financially impecunious defendants, in which the court dismissed an application for committal on the ground that the respondent was impecunious.

It was held that the impecuniosity of the defendant did not amount to a willful default of the defendant’s payment obligations under the order. The applicant would have to prove beyond a reasonable doubt that the defendant willfully defaulted on his payment obligations before an application for committal could be allowed. The basis to this is Order 45, rule 5 of the Rules of Court 2012 (“ROC”) which states that the party in breach has to refuse or neglect to perform his obligation under the monetary order. Therefore, the court was of the view that an impecunious party cannot be said to have been in willful default of his payment obligation and hence did not fall within the definition under Order 45, rule 5 of the ROC.

However, the courts seem to be more concerned with the circumstances surrounding the plea of impecuniosity. In Eric Lau Man Hing v Eramara Jaya Sdn Bhd & Ors, the application for an Order of Committal was allowed on the basis that though the defence of impecuniosity had been raised via sworn affidavits and evidence such as bank statements were produced, the applicants were able raise doubts as to the defendant’s financial capabilities. Further, the court was of the view that even if the defendants really were impecunious, they should have sought a variation of the order from the courts instead of simply not performing their obligations under the order.

It is clear from the case of Eric Lau that where the defendant has pleaded impecuniosity and the applicant has claimed to the contrary, it is vital for the defendant to conclusively prove that they indeed are impecunious via means other than sworn affidavits. This is the burden of the defendant to discharge. Further, in the event that the defendants have claimed impecuniosity consequent to the order of Court, the burden would rest with the defendants to:-

  1. Firstly, show the material change in the circumstances (i.e. what changed the financial situation, how and to what extent);
  2. Secondly, seek a variation of the order based on the change of circumstances and not raise financial impecuniosity as a defence only when faced with an order of committal.

The recent case of BYD Auto Industry Company Ltd v Amdac (M) Sdn Bhd also discussed the plea of impecuniosity as a defence to the non-compliance of the defendant with a court order. The defendants in this case contended that due to their dire financial state, they were unable to satisfy the judgement sum. However, the courts rejected the defendant’s plea of impecuniosity and made an Order for Committal on the following basis:

  1. that the defendants had initially informed the court that they had more than enough assets to meet the applicant’s claim; and
  2. that the defendants had made large transfers of money to undisclosed locations for unknown purposes subsequent to the Order of Court.

On this basis, the court was not satisfied that the defendants were indeed impecunious and sentenced the defendants to a month of imprisonment and imposed a fine.

The aforementioned Malaysian cases reflect a fairly clear position in Malaysia. The court would first have to be satisfied that the defendant is indeed impecunious and that there has been no material change in circumstances. Regardless, the burden is on the defendant to show the change in circumstances.

Foreign case law on impecuniosity as a defence

The position on impecunious parties within the same context in other jurisdictions is fairly similar to the Malaysian position elaborated upon earlier. In the Singaporean case of P J Holdings Inc V Ariel Singapore Pte Ltd, the court held the following: -

“In the premises, this means that an impecunious debtor would be outside of the scope of O 45 r 5 as such a person cannot be said to have "refused or neglected" to obey an order directing them to make payment. …In most instances, a person would ordinarily be regarded as impecunious if he is unable to satisfy the judgment debt upon the conclusion of the various execution proceedings. The logical ending point in such cases should be a winding-up order or a bankruptcy order, as the case may be.”

Similar to the judgment in Lee Lay Ling, the court in P J Holdings was of the view that impecunious judgments debtors should not be subject to an Order of Committal. The rationale to this was that such a person would not fall within Order 45 r 5(1)(a) (similar to Order 45, rule 5 of the ROC) as the said person did not neglect or refuse to make payment which implied a conscious act of volition. Further, in the more recent Singaporean case of Mok Kah Hong v Zheng Zhuan Yao, the court, in applying P J Holdings held that “it would be objectionable to commit a judgment debtor to prison in spite of the debtor’s proven inability to comply with the judgment or order.”

Mok Kah Hong first distinguishes between cases where the court has made a specific finding as to the financial capacity of the defendant and cases where no finding has been made during the course of the substantive hearing. Where the said specific finding reveals that the defendant does indeed have the financial means to pay the judgement debt, the defendant would have to put forward evidence to suggest that there has been a material change of circumstances that would result in the defendant’s impecuniosity. However, the court was of the view that if no specific finding has been made, and the defendant is an impecunious, it would be undesirable to imprison the debtor given his established inability to pay. The former is vital as the defendant may initially maintain that they do indeed have the necessary financial means to meet the applicant’s claim. Subsequently, these defendants then raise the plea of impecuniosity following the monetary order made by the court. In these cases, the defendant would have to put forth credible evidence that reflects a material change in circumstances that has resulted in the defendant becoming impecunious.

In the Ireland Supreme Court case of Laois County Council v Noel Hanrahan, the court disallowed a contempt application and considered the positions of impecunious parties within committal proceedings. The court held that when one pleads impecuniosity, evidence including but not limited to details of income and tax returns should be put forth. The court would then consider whether the party is truly impecunious. In the event that the said party is impecunious, then compliance would be beyond his reach. Such circumstances cannot be said to have been a willful breach on part of the defendant. The court in Laois relied on the English Court of Appeal decision in Danchevsky v Danchevsky held that the jurisdiction to commit a prison for non-compliance with a court order should not be exercised on the basis of mere inability to comply with the said order. Therefore, the court was of the view that imprisonment as a means of coercive enforcement should not be resorted to.

The dicta from the Zimbabwean Supreme Court case of Chinamora v Angwa Furnishers (Private) Ltd which was subsequently applied in the Irish High Court case of McCann v Judge of Monaghan District Court and others is of high relevance to the principles at hand. The Supreme Court in Chinamore held that: -

“…the onus was on the creditor to establish the debtor's ability to pay and the court would only order imprisonment if it was satisfied that the debtor could but would not pay, or if he failed to prove inability. The procedure under Order 28 required the debtor to produce evidence of his financial position, warned him of the possibility of imprisonment and, by enjoining the court to conduct a meticulous inquiry into the debtor's ability to pay, ensured that that issue was properly addressed and examined. That procedure accordingly contained sufficient safeguards to prevent a poverty-stricken debtor being consigned to jail…”


In short, Courts would examine two things when a plea of financial impecuniosity is raised in defence to an Order of Committal.

Firstly, Courts would consider the validity of the defendant’s impecuniosity; whether or not the defendant can conclusively prove his inability to pay via evidence of his financial position at the material time. This burden is fairly high as the Courts will venture into the evidence that the defendant must produce to show his inability and not rely on bare averments.

Secondly, in the event that the defendant is able to prove impecuniosity, an additional burden of seeking a variation of the order would be considered instead of simply not complying with the order. These factors would ultimately have an effect on the gravity of the sentence. If impecuniosity can be established, the courts are generally of the view that it would be objectionable to commit a person to prison because of their inability to comply with the order.