1. ) 1. Kingtime International Limited v Petrofac E&C Sdn Bhd (22IP-63-11/2015)

1.

GRYPHON ENERGY (ASIA-PACIFIC) SDN BHD (IN LIQUIDATION) PLAINTIFFS AND PETROFAC E&C SDN BHD DEFENDANT GROUNDS OF DECISION 2

This is an application for stay of proceedings on the taking of an account of profits awaiting appeal on the trial judgment of a patent infringement dispute to the Court of Appeal.

The First Plaintiff is a limited company registered in the British Virgin Islands and the Second Plaintiff is a private limited company registered in Malaysia (but presently undergoing liquidation).

The Defendant is a private limited company registered in Malaysia.

In this Suit, the Plaintiffs sued the Defendant for patent infringement. 3

The trial of the Suit was split pursuant to the Court order dated 9 November 2016, to wit the liability for infringement is tried ahead followed by either the assessment of damages or taking an account of profit if liability is determined in favour of the Plaintiffs.

After the trial on liability, Wong Kian Keong J on 11 July 2018 entered judgment in favour of the Plaintiffs. The Plaintiffs subsequently elected to take an account of profits.

However the Defendant on 9 August 2018 filed an appeal to the Court of Appeal against the trial judgment. Additionally, the Defendant on 10 August 2018 filed its notice of application (enclosure 192) (“Application”) to stay further proceedings in this Suit pending the disposal of the appeal by the Court of Appeal.

The affidavits that were filed for purposes of the Application are as follows:

Defendant’s affidavit in support affirmed by Seew Choi Har dated 9 August 2018; 4

(ii) First Plaintiff’s affidavit in reply affirmed by Nagendran C. Nadarajah dated 7 September 2018; and

(iii) Defendant’s affidavit in reply affirmed by Seew Choi Har dated 3 October 2018.

The Application came before me on 16 October 2018. After having read the written submissions filed by the parties and oral arguments of counsel, I disallowed the Application with costs be in the cause of the appeal.

I now furnish below the grounds in support of my aforesaid decision.

The Defendant principally submitted that unless an order for stay of proceedings is granted by the Court, the Defendant will be required or compelled to disclose and produce its documents to the Plaintiffs for purposes of the taking of an account of profits of the Defendant. The 5 documents involved are likely to be commercial information, technical information and trade secrets of the Defendant and other third party oil and gas industry players which are highly confidential and sensitive. It was stressed that the Plaintiffs are business competitors of the Defendant within a small and close circle of oil and gas industry players. Disclosure of the aforesaid documents will therefore be highly prejudicial to the business interests of the Defendant as well as other third parties by giving the Plaintiffs an unfair market advantage. Moreover, there would be the risk of further exposure, dissemination and abuse or misuse of information that is disclosed by the Defendant.

That aside, the Defendant additionally submitted that there will be abortive costs incurred in the process of taking an account of profits should the Defendant’s appeal be eventually allowed by the Court of Appeal. Judicial time would also be wasted.

That notwithstanding, the Defendant also submitted that the Plaintiffs will not suffer any prejudice if the process of taking an account of profits is stayed until after the disposal of the appeal by the Court of Appeal. This is because the Plaintiffs’ redress is basically monetary in 6 nature and the delay in the Plaintiffs’ recovery of the profits of the Defendant due to the late start and completion of the process of taking an account of profits will be compensated by interest that has been already ordered in the trial judgment dated 11 July 2018.

The Plaintiff however strenuously opposed the Application by submitting that the Defendant’s submissions do not constitute special circumstances as envisaged in Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2004] 1 MLJ 257 and Jagdis Singh a/l Banta Singh v Outlet Rank (M) Sdn Bhd [2013] 4 MLJ 213.

Generally, it is provided in s. 73 of the Courts of Judicature Act 1964 that an appeal shall not operate as a stay of execution or proceedings unless so ordered by the Court.

The law on stay of execution or proceedings pending appeal is trite and set out in the Federal Court case of Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd (supra). In that case Augustine Paul JCA (later FCJ) held as follows with emphasis added by me: 7 “7. The general rule is that an appeal shall not operate as a stay of execution unless the court so orders. Accordingly, as Brown J said in Serangoon Garden Estate Ltd v Ang Keng [1953] MLJ 116 while commenting on the discretion to grant a stay: But it is a clear principle that the Court will not deprive a successful party of the fruits of his litigation until an appeal is determined, unless the unsuccessful party can show special circumstances to justify it. …

The need to establish the existence of special circumstances to enable the court to grant a stay of execution has been well-established in this country (see, for example, the Federal Court cases of Re Kong Thai Sawmill (Miri) Sdn Bhd, Ling Beng Sung v Kong Thai Sawmill (Miri) Sdn Bhd & Ors (No 2) [1976] 1 MLJ 131; Kerajaan Malaysia v Jasanusa Sdn Bhd [1995] 2 MLJ 105 and Kerajaan Malaysia v Dato' Hj Ghani Gilong [1995] 2 MLJ 119). There are numerous other cases which have adopted this test (see, for example, Leong Poh Shoe v Ng Kat Chong [1966] 1 MLJ 86; Ajaib Singh v Jeffrey 8 Fernandez [1971] 139; Syarikat Berpakat v Lim Kai Kok [1983] 1 MLJ 406; Matang Holdings Bhd & Ors v Dato' Lee San Choon & Ors [1985] 2 MLJ 406; Che Wan Development Sdn Bhd v Co-operative Central Bank Bhd [1989] 3 MLJ 40 and Wu Shu Chen (sole executrix of the estate of Goh Keng How, deceased) v Raja Zainal Abidin bin Raja Hussain & Anor [1995] 3 MLJ 224…”

It was reiterated in the Court of Appeal case of Rowstead Systems Sdn Bhd v Bumicrystal Technology (M) Sdn Bhd [2005] 3 MLJ 132 that the applicant must show the existence of special circumstances in an application for a stay of proceedings. Subsequently in another Court of Appeal case of Jagdis Singh a/l Banta Singh v Outlet Rank (M) Sdn Bhd (supra), Zawawi Salleh JCA (now FCJ) held as follows on the relevant considerations in respect of an application for a stay of proceedings with emphasis added by me: “PRINCIPLES OF STAY PROCEEDINGS [22] Now, what factors or principles will, and should, guide the courts in applications for a stay of an order granted by a court. These factors or principles have been reiterated in very many of cases decided by our courts. The factors or principles so 9 enumerated are inexhaustive, and not all of them are applicable to every case. Each has its own peculiar principle. Some of the principles to be considered in the motions may be stated as follows:

the courts have an unimpeded discretion to grant or refuse stay. In this, like in all other instances of discretion, the court is bound to exercise that discretion both judicially as well as judiciously and not erratically (see Serangoon Garden Estate Ltd v Ang Keng [1953] 1 MLJ 116; Leong Poh Shee v Ng Kat Chong [1966] 1 MLJ 86);

an unsuccessful party applying for a stay must show 'special circumstances'. What will constitute 'special circumstances' will no doubt vary from case to case. The fact that an appeal would be rendered nugatory if stay was refused is the most common one (see Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2004] 1 MLJ 257; [2003] 4 CLJ 1 and Re Kong Thai Sawmill (Miri) Sdn Bhd; Ling Beng Sung v Kong Thai Sawmill (Miri) Sdn Bhd & Ors (No 2) [1976] 1 MLJ 131). The application is not granted as a matter of routine and it is not an automatic or mechanical relief slavishly followed after filing an 10 appeal. In every matter or suit before a court of law, whether in its original or appellate stage of proceedings, the court will consider the competing rights of both parties including the applicant and respondent to justice;

there is a need to preserve the res or preservation of the subject matter of litigation. The courts have an obligation to protect the res for the purpose of ensuring that the appeal, if successful, will not be rendered nugatory (see Erinford Properties Ltd v Cheshire County Council [1974] 2 WLR 749). But where it is shown by affidavit evidence, say by the respondent, that the res will not be destroyed or there is in fact no res, an application may not be granted;

where an application is an abuse of the court process, then the stay of proceedings will not be granted. A typical example of abuse of court process is where a suit is duplicated or where a party employs improper and perverse procedure to obtain an advantage undeservedly;

it is important to stress that initiation of a suit in a court of law demands the suit will be heard expeditiously and 11 completed without any inhibition midway. Therefore, where an application for stay of proceedings is intended to merely stop or suspend the proceedings; it will be refused. Some applicants, on seeing the weakness of their client's case, would resort to application for stay and thereby waste the time of the other party and the court. The party simply cannot resort to the interlocutory of stay proceedings on having the slightest disagreement with any ruling of a trial judge. Courts are enjoined not to encourage such unwholesome practice; and

an applicant for stay of proceedings must come with clean hands because what he is asking is an equitable relief. Equity will not assist the unclean. That is why the court has to look into the antecedents of the parties.”

The grant of the stay of proceedings in this Application as sought by the Defendant is discretionary and I noted from the case of MCAT Gen Sdn Bhd v Celcom (Malaysia) Bhd (Part 2) [2007] 8 MLJ 107 that it involved determining the fairest mode after taking into consideration all the relevant matters which exist between the parties. It 12 is essentially a balancing act against the probable relative injustices to the parties. In the case of Universal Trustee (M) Bhd v Lambang Pertama Sdn Bhd & Anor [2015] 7 MLJ 305, it was held that ordinarily the applicant for a stay of proceedings should bear a heavier burden vis a vis an applicant for execution because an application to stay proceedings will hinder the expeditious disposal of the suit. It seems that the possibility of wastage of judicial time ranks secondary to the expeditious disposal of the whole of the Suit.

First and foremost, I have reviewed the Court order dated 9 November 2016 and noted that there is nothing stated therein which inhibited the assessment of damages or taking an account of profits after the conclusion of the trial on liability. Consequently it must follow that the Plaintiffs’ elected option of taking an account for profits should proceed expeditiously uninterrupted notwithstanding there is an appeal on the judgment on liability unless there are special circumstances to justify otherwise.

The principal thrust of the Defendant’s justification to stay the taking of an account of profits is that there would be divulgence of 13 confidential information and trade secrets. In this respect, I have scrutinized the affidavits filed by the Defendant and as submitted by the Plaintiffs, I find that the Defendant did not specifically particularise the alleged commercially sensitive and confidential information in question that are required to be disclosed. The Defendant merely delved in generalities here which are unhelpful to the Court. It must not be overlooked that the burden lies on the Defendant to satisfy the Court that these information are truly confidential in nature or trade secrets. The allegations of the Defendant here are thus bare averments of little if not of no cogency and must accordingly be discarded following the case of Multi-Purpose Credit Sdn Bhd v Tan Sri Dato’ Paduka (Dr) Ting Pek Khing [2006] 6 CLJ 205.

Be that as it may, the process of taking an account of profits will often normally precede with discovery application(s). Hence the Defendant may at that discovery stage still mount a challenge against disclosure based on appropriate legal grounds which may include confidentiality. However the existence of confidentiality per se does not mean that disclosure and production will certainly be denied by the Court - see Science Research Council v Nasse BL Cars Ltd (formerly Leyland Cars) v Vyas [1979] 3 All ER 673 CA. In circumstances 14 where disclosure of confidential information is inevitable, the Court is nonetheless still empowered to order conditional disclosure with additional confidentiality arrangements or protection measures built-in to safeguard and pacify the Defendant’s fears or concern as was done in BLY v BLZ and another [2017] 4 SLR 410.

In the premises, I find that the Defendant’s concern here of potential injustice caused by the necessity to divulge commercially sensitive and confidential informationis unsustainable.

As to the Defendant’s secondary submission on abortive costs that would be incurred if the appeal against the trial judgment is allowed, I observed in the case of Miri Hock Lee Enterprise Sdn Bhd v Hong Leong Assurance Bhd [2011] MLJU 402, it was held that in the event the appeal is allowed after the assessment of damages, the defendant therein can be compensated with costs in respect of the assessment of damages that was carried out. Likewise here, I do not see any injustice inflicted upon the Defendant even if the appeal is eventually decided in its favour because the aborted costs of having undergone the taking of 15 an account of profits can be ordered by the Court to be paid by the Plaintiffs to the Defendant.

Zawawi Salleh JCA (now FCJ) has made it clear in Jagdis Singh a/l Banta Singh v Outlet Rank (M) Sdn Bhd (supra) that initiation of a suit in a court of law demands the suit will be heard expeditiously and completed without any inhibition midway. On the totality of the present circumstances here, I do not find any special circumstance that warrants a stay of proceedings to halt the taking of the account of profits in prevention of irreparable injustice caused to the Defendant.

It is for the foregoing reasons that I disallowed the Application as so ordered. Dated this 18 October 2018 t.t. LIM CHONG FONG JUDGE HIGH COURT KUALA LUMPUR 16 COUNSEL FOR THE PLAINTIFFS: AMBIGA SREENEVASAN (JANINI RAJESWARAN WITH HER) SOLICITORS FOR THE PLAINTIFFS KUMAR PARTNERSHIP COUNSEL FOR THE DEFENDANT: CHOON HON LENG