Elegant Group Sdn Bhd v 1. ) Vital Living Empire Sdn Bhd (WA-12ANCvC-164-11/2025)

TETUAN CHEONG CHAMBERS ... RESPONDENTS GROUNDS OF JUDGMENT

This is an appeal by the Appellant/1st Defendant ("D1") against the decision of the learned Sessions Court Judge ("learned SCJ") on 6 November 2025, dismissing D1's application under Enc. 144 for a preservation order pursuant to Order 29 Rule 2(3) of the Rules of Court 2012 ("O29R2(3)ROC2012").

The subject matter of the application concerns the sum of RM164,758.63 ("Disputed Monies"). D1 sought an order that the Disputed Monies be returned to and held by the 4th Respondent/Intervener ("Messrs Cheong Chambers") as stakeholder pending final determination of D1's counterclaim; or alternatively, paid into Court.

Having heard and read submissions from all parties and carefully considered the Records of Appeal, I allow this appeal for the reasons set out below.

The background facts are largely undisputed. D1 and the 1st Respondent/1st Plaintiff ("P1") entered into two tenancy agreements dated 24 December 2020 and 15 February 2021 ("Tenancy Agreements") for the rental of certain premises ("Premises").

P1 fell into arrears in payment of rent and utility charges from November 2021 onwards. Despite repeated demands by D1's former solicitors, Messrs Ngeow & Tan, P1 failed to settle the outstanding sums.

On 5 October 2022, D1 terminated the Tenancy Agreements and demanded vacant possession within seven days, failing which P1 would be liable for double rent.

Instead of vacating, P1 commenced proceedings in the Sessions Court on 17 November 2022, seeking declarations that the termination was invalid and claiming breach of an alleged "oral agreement reached on 1 and/or 2 September 2022".

On or about 23 February 2023, P1's solicitors forwarded a cheque for RM164,750.00 to Messrs Cheong Chambers (then acting for D1), purportedly as "full and final settlement of the outstanding rental based on the amounts due to D1 and the oral agreement between parties on the 1st and/or 2nd September 2022".

By the letter dated 27 February 2023, Messrs Cheong Chambers rejected P1's characterisation of the payment and stated that the Tenancy Agreements had been validly terminated; no agreement had been reached between the parties; the payment did not constitute "full and final settlement"; and the sum would be held as stakeholder pending determination of D1's counterclaim.

P1's solicitors did not respond to this letter or object to the stakeholder arrangement.

The sum was deposited by Messrs Cheong Chambers into a fixed deposit account as stakeholder, subject to stakeholder fees under Rule 14.10 of the Bar Council Rulings.

On 1 August 2023, Messrs SF Chan & Co ("Messrs SF Chan") replaced Messrs Cheong Chambers as solicitors for D1.

D1 filed a counterclaim against P1 for, inter alia, outstanding rental arrears, double rent, and damages. The issue of the RM164,750.00 payment was expressly pleaded in D1's Re-Amended Defence and Counterclaim dated 25 June 2024 at paras 7.18 to 7.22, with relief sought for the release of the sum.

On 12 February 2025, the Sessions Court granted summary judgment in favour of D1 on the counterclaim. Pursuant to that order, Messrs Cheong Chambers released the sum of RM164,758.63 to Messrs SF Chan, who transmitted it to D1.

On 23 July 2025, this Honourable Court allowed P1's appeal and set aside the summary judgment. It must be highlighted that no consequential orders were made regarding the Disputed Monies.

Following the setting aside of the summary judgment, D1 attempted to return the Disputed Monies to Messrs Cheong Chambers to be held as stakeholder pending final determination of the counterclaim. Messrs Cheong Chambers declined to accept the monies, stating they no longer had locus standi as they had ceased acting for D1.

P1 then demanded immediate payment of the Disputed Monies from D1 and Messrs SF Chan, and even commenced separate proceedings (Sessions Court Originating Summons No. WA-A54 279-08/2025), which was subsequently struck out on 19 November 2025.

In light of the impasse, D1 filed the present application seeking preservation of the Disputed Monies.

The learned SCJ dismissed D1's application on the following principal grounds:

The learned SCJ found that the Disputed Monies belonged to P1 as they were paid pursuant to a purported oral agreement for settlement of rental arrears. His Lordship held at para 24 of the Grounds of Judgment ("GOJ"): "Wang yang sedang dipertikaikan itu pada setiap masa yang material adalah milik sah Plaintif Pertama. Plaintif Pertama tidak pernah memberi kebenaran, sama ada secara jelas atau tersirat, untuk wang itu dibayar kepada Defendan Pertama atau disimpan untuk faedah Defendan Pertama."

(ii) Also, the learned SCJ held that once the summary judgment was set aside, the parties were restored to their original positions, and D1 had no right to hold the Disputed Monies. At paras 26-28 of the GOJ: "[26] Bila penghakiman terus itu diketepikan, maka kedudukan pihak Defendan Pertama dan Plaintif Pertama adalah kembali kepada kedudukan asal... [27] Defendan Pertama tidak ada hak untuk memohon perintah agar wang tersebut dipegang oleh Pencelah atau didepositkan kepada Mahkamah sebagai suatu amanah kerana tiada asas dari segi undang-undang untuk berbuat demikian. [28] Tidak dipertikaikan bahawa wang tersebut adalah milik Plaintif Pertama. Jadi, seharusnya wang itu dikembalikan kepada Plaintif Pertama..."

(iii) The learned SCJ applied ss 66 and 73 of the Contracts Act 1950 ("CA 1950"), holding that since no valid agreement existed, P1 was entitled to restitution of the Retention Monies paid. At para 39 GOJ: "Seksyen 66 & 73 Akta Kontrak 1950 adalah terpakai dalam kes kita di sini... wang itu mesti dipulangkan mengikut prinsip pemulangan (restitution)..."

(iv) The learned SCJ then held that O 29 R 2(3) ROC 2012 was inapplicable as there was "no honest dispute" about ownership of the monies. At paras 29-31 GOJ: "[29] ...Aturan 29 Kaedah 2(3) membenarkan Mahkamah mengarahkan wang dibayar ke Mahkamah hanya jika terdapat pertikaian yang jujur mengenai pemilik wang tersebut. Dalam kes ini, tiada pertikaian yang jujur tentang pemilik wang RM164,750.00 itu..." D. ISSUES ON APPEAL

The principal issues arising in this appeal are:

Whether the learned SCJ erred in making findings on the merits regarding ownership and entitlement to the Disputed Monies in an interlocutory preservation application;

Whether the learned SCJ erred in finding there was no genuine dispute regarding the Disputed Monies;

Whether the learned SCJ erred in applying ss 66 and 73 CA 1950 as a basis for refusing the preservation order;

Whether the Disputed Monies constitute property which is the subject matter of the proceedings warranting preservation under O 29 R 2(3) ROC 2012 and/or the Court's inherent jurisdiction;

Whether the balance of justice and equity favours preservation of the Disputed Monies pending final determination. E. LEGAL PRINCIPLES

The jurisdiction to grant preservation orders is conferred by O 29 R 2 ROC 2012 and the Court's inherent jurisdiction under O 92 R 4 ROC 2012.

O29R2ROC2012 provides: "(1) On the application of any party to a cause or matter, the Court may make an order for the detention, custody or preservation of any property which is the subject matter of the cause or matter...

Where the right of any party to a specific fund is in dispute in a cause or matter, the Court may, on the application of a party to the cause or matter, order the fund to be paid into Court or otherwise secured."

The fundamental principles governing preservation orders are well-established:

First, the purpose is to preserve the status quo and prevent dissipation or disposal of property forming the subject matter of litigation pending final determination. As stated by the Federal Court in Sebaya Sdn Bhd v Syarikat Bekerjasama Ladang Kelapa Sawit Pegawai-Pegawai Negeri Pahang Berhad [1979] 1 LNS 91 FC: "...the High Court had, in the circumstances of this case, jurisdiction to make the order and had exercised its jurisdiction properly in making the order."

(ii) Second, preservation orders are protective and neutral in nature. They do not pre-judge the merits but merely safeguard disputed assets until rights can be properly determined. The Court of Appeal in Tan Sri Dato' Dr Awang Had Salleh & Anor v Dato' Dr Hj Mohamed Haniffa Hj Abdullah [2007] 5 CLJ 565 CA stated: "[84] ...there was a risk that the 1st defendant may dissipate the proceeds of the said shares and the said cash sum before the disposal of the appeal proper if the orders applied for in the motion were not given... this interim order would serve the purpose of preserving that asset pending hearing of the appeal proper... [86] At the hearing of the appeal proper, this court would be in a position to decide whether the trial judge was correct... Pending the disposal of the appeal proper, the order that we made would be necessary to prevent prejudice to the claims of the 2nd plaintiff."

(iii) Third, the threshold for granting preservation orders is not high. The Court need only be satisfied that:

there is a genuine dispute concerning identifiable property or funds forming part of the subject matter of the proceedings;

preservation is necessary to prevent injustice or prejudice to a party's claim;

The balance of convenience and justice favours preservation. I agree with the decision of Karunamoorthy Ramasamy v Hariharan Subramaniam & Ors [2020] 1 LNS 1400 HC: "[10] It is established law that an order for interim preservation of property is a temporary and discretionary remedy. It is to preserve the property which is the subject matter of an action pending the disposal of the said action. To consider whether to grant it or to refuse it the Court is not concerned with the chances of success or failure of the plaintiff in proving his civil suit at the forthcoming trial, neither is the Court's function to evaluate the evidence and materials before it for that purpose. The Court is simply concerned with what it has to do in the meantime in order to protect the right of the parties so that no irreparable injury would be caused to either of them... [12] The court is also conferred with discretion, if arriving to the conclusion that the monies ought to be secured or preserved, to decide the manner in which the monies is to be secured or preserved."

(iv) Fourth, applications under O 29 R 2 ROC 2012 are interlocutory in nature. The Court's role is not to determine substantive rights, ownership, or contractual entitlements. Such matters are for determination at trial on full evidence. The Court's concern at the interlocutory stage is limited to whether preservation is necessary to safeguard the parties' rights pending adjudication. E2. Scope of Appellate Intervention

It is well-settled that an appellate court will not interfere with a trial judge's exercise of discretion unless the judge applied wrong principles of law; took into account irrelevant considerations or failed to consider relevant matters; or reached a decision that is plainly wrong or unjust (see Gan Yook Chin & Anor v Lee Ing Chin & Ors [2004] 2 MLRA 1 FC and TAY KEONG KOK & ORS v EASTMONT SDN BHD & ANOTHER APPEAL [2025] 1 MLRA 85 CA).

With respect, the learned SCJ fell into fundamental error by prematurely venturing into the merits of the dispute, making findings on ownership, contractual entitlement, and the validity of the alleged "oral agreement", matters which are the subject of a live dispute in the Sessions Court proceedings.

The following findings by the learned SCJ were not to be decided yet at the interlocutory stage:

That the monies "adalah milik sah Plaintif Pertama" (rightly belonged to P1)(see para 24 GOJ);

That the payment was made pursuant to an "oral agreement" (see para 36 GOJ);

That D1 had "accepted by conduct" the terms of payment (see para 37 GOJ);

That P1 is entitled to restitution under ss 66 and 73 CA 1950 (see para 39 GOJ).

These are substantive determinations on the merits which can only be properly made after full trial with evidence tested under crossexamination. By making such findings at the interlocutory stage, the learned SCJ had usurped the function of the trial court; pre-judged disputed issues that remain live in the counterclaim; applied the wrong test for preservation applications; and had exceeded the proper scope of O29R2ROC2012.

The proper inquiry at this stage is not "who owns the monies" or "is P1 entitled to restitution" but rather to find the answer as to whether there is a real dispute concerning identifiable monies forming part of the subject matter, whether preservation is necessary pending determination of that dispute, and where the balance of justice lie.

As emphasised in Karunamoorthy (supra): "the Court is not concerned with the chances of success or failure of the plaintiff in proving his civil suit at the forthcoming trial, neither is the Court's function to evaluate the evidence and materials before it for that purpose."

The learned SCJ's approach conflated the protective function of a preservation order with a substantive determination of rights. This constitutes a misdirection in law warranting appellate intervention. F2. There is Plainly a Genuine Dispute

Contrary to the learned SCJ's finding, the evidence establishes that there is a genuine and serious dispute concerning the Disputed Monies. The Dispute is Expressly Pleaded

D1's Re-Amended Defence and Counterclaim dated 25 June 2024 expressly raises the issue of the RM164,750.00 payment at paras 7.18 to 7.22. D1 pleads, inter alia:

The payment was made unilaterally by P1 without D1's consent or agreement;

The payment was disputed and rejected by D1;

The monies were held as stakeholder pending the determination of the counterclaim;

D1 seeks an order for release of the sum (see para 19(o) of the amended relief).

These pleadings demonstrate that the Disputed Monies form part of the live subject matter of the counterclaim proceedings. The dispute has been pleaded and is awaiting determination in trial.

The contemporaneous documentary evidence overwhelmingly demonstrates the existence of a genuine dispute:

in P1's solicitors' letter dated 22 February 2023, P1 asserted the payment was made: "as full and final settlement of the outstanding rental based on the amounts due to your client and the oral agreement between parties on the 1st and/or 2nd September 2022..."

(ii) in Messrs Cheong Chambers' letter dated 27 February 2023, D1 categorically rejected this characterisation and stated:

The Tenancy Agreements had been effectively terminated;

There is no oral agreement reached between P1 and D1 on 1-2 September 2022 ad alleged and /or as may have been fictitiously imagined by P1;

The payment of RM164,750.00 does not constitute a full and final settlement of the outstanding rental due and owing by P1 to D1;

The sum would be held as stakeholder pending the determination of D1's counterclaim.

(iii) P1's solicitors did not respond to dispute D1's position or demand the return of the monies at that time. The silence lasted for two years, until after the summary judgment was set aside.

This correspondence alone establishes a clear dispute concerning:

Whether any "oral agreement" was reached;

Whether the payment constitutes "full and final settlement";

The legal character and purpose of the payment;

Whether the monies were paid conditionally or absolutely;

The rights of the parties to the Disputed Monies. The Alleged "Oral Agreement" Has Been Judicially Determined to be Non-Existent

Significantly, P1's claim, premised on an alleged "oral agreement on 1 and/or 2 September 2022" has already been struck out and affirmed by the Court of Appeal on 2 October 2025 (see this Court's decision in Vital Living Empire Sdn Bhd & Ors v Elegant Group Sdn Bhd [2024] CLJU 1825 HC.

In Vital Living Empire (supra), it was held that: "[34] The Plaintiffs' claim for breach of contract cannot stand as no contract was established... There was no consent from D1 since the Plaintiffs did not act to fulfil D1's counter-proposal by the dateline... there is no contract as there was no meeting of the minds to act on D1's Counterproposal by the dateline given. [35] ...the unsubstantiated claim made against the landlord shows the Plaintiffs' deliberate but futile attempts to deflect the termination notices... All the Plaintiffs intended to do was to avoid paying D1 the payments that escalated by the day for their breaches of the 2 tenancy agreements. The Plaintiffs' claim is scandalous, frivolous and/or vexatious. [36] The Plaintiffs' action, which has no reasonable cause of action, is also scandalous, frivolous, and vexatious against D1..."

Thus, the very foundation upon which P1 asserts entitlement to the monies via the alleged "oral agreement" has been ultimately determined to be non-existent.

Yet the learned SCJ accepted at face value P1's assertion that the payment was made pursuant to this fictitious agreement, and relied upon it as a basis for refusing preservation. This constitutes a clear error. The Nature and Purpose of the Payment is Disputed

The core dispute may be summarised as follows: P1's Position: The payment was made pursuant to an "oral agreement" reached on "1 and/or 2 September 2022" as full and final settlement of rental for September 2022 to January 2023. Since that alleged agreement has been found non-existent, P1 is entitled to restitution of the monies.

No oral agreement existed (as earlier determined);

The payment was made voluntarily towards P1's admitted arrears under the validly executed and subsequently terminated Tenancy Agreements;

The payment was made during the course of the proceedings and was disputed from the outset;

The payment was expressly made subject to stakeholder arrangement pending determination of D1's counterclaim;

P1 is barred by acceptance by conduct from now claiming the monies back, having remained silent for over two years after the stakeholder terms were communicated.

These are fundamental disputes going to the characterisation of the payment, i.e., whether it is a conditional or absolute payment, the existence of agreement/settlement, whether there is the right to restitution or it is a debt discharge, and if there is an issue of estoppel and acceptance by conduct.

Such disputes can only be resolved on full evidence at trial, not on an interlocutory preservation application. The Learned SCJ's Finding of "No Genuine Dispute" is Contradictory

With respect, the learned SCJ's reasoning contains a contradiction. At para 29 GOJ, it was acknowledged that: "...terdapat pertikaian yang jujur mengenai pemilik wang tersebut... Wang itu dibayar oleh Plaintif-Plaintif kepada Defendan Pertama berdasarkan perjanjian lisan yang jelas..."

Yet the learned SCJ then concluded there was no genuine dispute about ownership as the payment was made based on the clear oral agreement.

This reasoning is contradictory. If the payment was admittedly made "based on a clear oral agreement," which D1 denies ever existed, that is precisely the dispute that requires determination at trial.

Moreover, at para 31 GOJ, the learned SCJ stated: "Wang tersebut adalah milik Plaintif, dan ia diberikan kepada Defendan Pertama hanya sebagai bayaran sewa bagi bulanbulan tertentu."

This finding directly contradicts P1's own assertion that the payment was made pursuant to an "oral agreement" for "full and final settlement". It also contradicts the earlier finding that the payment was made "based on the oral agreement".

The existence of such contradictions within the judgment itself demonstrates the complexity of the disputed issues and confirms that they are unsuitable for summary determination on an interlocutory application.

For the foregoing reasons, I find that the learned SCJ erred in concluding there was no genuine dispute. The evidence establishes clearly that:

The Disputed Monies form part of the live subject matter expressly pleaded in the counterclaim;

Fundamental disputes exist concerning the legal character, purpose, and entitlement to the monies;

These disputes require full determination at trial on tested evidence;

The existence of the dispute is not contingent on whether P1 or D1 is ultimately correct-the mere existence of a bona fide dispute is sufficient to warrant preservation. F3. The Learned SCJ Erred in Applying ss 66 and 73 CA 1950

The learned SCJ held at para 39 GOJ that: "Seksyen 66 & 73 Akta Kontrak 1950 adalah terpakai dalam kes kita di sini... Oleh itu, tiada perjanjian muktamad wujud, dan wang itu mesti dipulangkan mengikut prinsip pemulangan (restitution)..."

With respect, this application of ss 66 and 73 CA 1950 is erroneous for multiple reasons.

Ss 66 and 73 CA 1950 provide: Section 66: "When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under the agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it." Section 73: "A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it."

These provisions confer substantive rights of restitution. They are remedies that may be awarded after trial if established on the evidence.

The applicability of these provisions is not determinative of whether a preservation order should be granted. The learned SCJ conflated a substantive restitutionary remedy (to be determined at trial); with an interlocutory protective mechanism (O 29 R 2 ROC 2012).

The question on a preservation application is not that "is P1 entitled to restitution under ss 66 and 3 CA 1950 but rather "should the disputed monies be preserved pending determination of whether P1 is so entitled.

By treating P1's assertion of its rights under restitution as conclusive and determinative of the preservation application, the learned SCJ pre-judged the very merits that are in dispute.

In any event, s 66 CA 1950 does not assist P1. The provision applies where an agreement is discovered to be void or a contract becomes void.

On the present facts:

the payment of RM164,750.00 was not made under any void agreement. As determined in Vital Living Empire (supra), no agreement whatsoever came into existence. The absence of agreement is not the same as a void agreement.

(ii) the payment was made towards valid contractual obligations under the executed and validly subsisting (albeit subsequently terminated) Tenancy Agreements. The Tenancy Agreements themselves have never been suggested to be void.

(iii) to the extent P1 asserts the payment was made for some purpose unrelated to the Tenancy Agreements (namely, the fictitious "oral agreement"), that is a matter for P1 to prove at trial. It cannot form the basis for refusing preservation at this interlocutory stage.

S 73 CA 1950 applies where money is paid by mistake, or under coercion. That is not the case with the Disputed Monies here.

Neither basis is established here since:

the payment was expressly stated to be voluntary. P1's solicitors' letter dated 22 February 2023 makes clear the payment was made deliberately and intentionally based on what P1 claimed was an agreement.

(ii) there is no allegation whatsoever of mistake. P1 knew exactly what it was paying and why.

(iii) there is no allegation of coercion. To the contrary, the payment was made during proceedings initiated by P1 itself, as part of P1's strategy to substantiate its claim that the Tenancy Agreements remained valid.

(iv) after D1 communicated via Messrs Cheong Chambers' letter dated 27 February 2023, the payment was disputed and would be held as stakeholder. P1 remained silent for over two years. This silence constitutes acceptance by conduct of the stakeholder arrangement and bars P1 from now claiming that the payment was made by mistake.

For the foregoing reasons, whether ss 66 or 73 CA 1950 apply is itself disputed and subject to determination at trial.

By holding these provisions determinatively applied at the interlocutory stage, the learned SCJ again had usurped the trial court's function; it resolved disputed questions of mixed fact and law without a proper evidential foundation, which resulted in the deprivation of D1 of the right to contest these issues at trial.

This constitutes a grave error. F4. The Disputed Monies are Clearly Subject Matter Warranting Preservation

The Disputed Monies unquestionably constitute "property which is the subject matter" within the meaning of O 29 R 2(1) ROC 2012, and "a specific fund... in dispute" within O 29 R 2(3) ROC 2012.

D1's Re-Amended Defence and Counterclaim expressly pleads the RM164,750.00 payment at paras 7.18 to 7.22. At para 19(o), D1 seeks relief: "Jumlah RM164,750.00 yang dipegang oleh Tetuan Cheong Chambers sebagai 'stakeholder' dilepaskan oleh Tetuan Cheong Chambers dalam masa dua (2) hari dari tarikh penghakiman ini..."

This establishes beyond doubt that the Disputed Monies form part of the subject matter of the counterclaim proceedings.

The Disputed Monies are a specific, identifiable sum (RM164,758.63), which are currently in D1's possession (having been released pursuant to the now-set-aside summary judgment), are subject to competing claims by P1 and D1, and are directly related to the underlying disputes in the action.

These characteristics make the Disputed Monies the subject matter for a preservation order.

From February 2023 until February 2025 (approximately two years), the Stakeholder Sum was held by Messrs Cheong Chambers as a stakeholder pursuant to the Original Undertaking.

This stakeholder arrangement was expressly communicated to P1's solicitors on 27 February 2023; never objected to by P1 for over two years; implemented in accordance with the Bar Council Rulings (stakeholder fees charged); and predicated on the monies being preserved pending determination of the counterclaim.

The stakeholder character of the Disputed Monies does not disappear merely because the stakeholder solicitors ceased acting for D1; and/or they were temporarily released pursuant to a summary judgment that was subsequently set aside.

The purpose of the stakeholder arrangement is a preservation pending final determination, which remains unfulfilled because the counterclaim has yet to be determined.

When this Court set aside the summary judgment on 23 July 2025, the effect was to restore the parties to their positions prior to the summary judgment.

Prior to the summary judgment, the counterclaim was pending; the Disputed Monies were held as stakeholder; and neither party had any adjudicated right to the Disputed Monies.

The setting aside of the summary judgment did not adjudicate P1's entitlement to the monies. It simply meant the issues would proceed to trial.

Critically, no consequential orders were made regarding the Disputed Monies when the summary judgment was set aside. This reflects that the proper treatment of the Disputed Monies requires specific determination, which is precisely what D1 now seeks through this application.

To hold that setting aside the summary judgment automatically entitles P1 to immediate payment would be pre-judging P1's entitlement without trial. It would also render D1's pleaded claim regarding the monies nugatory besides creating a risk of irretrievable prejudice to D1 should it succeed in trial.

If the Disputed Monies are not preserved, D1 would encounter a real risk of being unable to recover if it succeeds in the counterclaim. The evidence establishes that P1 has been in continuous arrears since November 2021, P1's paid-up capital is only RM400.00, P1 has not filed current financial statements, P1's last filed accounts show no revenue and losses, P1's business premises are in an abandoned state and P1 has failed to pay costs awarded against it throughout the proceedings.

P1's conduct throughout demonstrates a pattern of avoiding payment obligations in failing to pay rent leading to termination. P1 has been initiating proceedings based on a fictitious "oral agreement" (subsequently struck out), withholding vacant possession without paying rent, failing to pay the awarded costs and commencing fresh proceedings (Suit 279) which were subsequently also struck out as frivolous.

P1's sudden demand for the monies immediately after the summary judgment was set aside (having remained silent for over two years) suggests tactical opportunism rather than genuine entitlement. I also find that preservation does not prejudice P1. If P1 succeeds in defending the counterclaim, P1 will receive the monies with interest. I view that P1's rights are fully protected. The Disputed Monies represent only a fraction of D1's total counterclaim of RM1,690,553.98. Even if preserved, D1 must still prove the balance of its claim at trial.

For the foregoing reasons, I find that the Disputed Monies unquestionably constitute property forming part of the subject matter of the proceedings. As such, preservation is necessary to prevent injustice and irretrievable prejudice to D1, and the balance of justice and convenience strongly favours preservation.

Now the question arises as to in what manner the Disputed Monies should be preserved.

D1 seeks two alternative forms of relief, namely that the Disputed Monies be returned to and held by Messrs Cheong Chambers as a stakeholder; or alternatively that the Disputed Monies be paid into Court.

Messrs Cheong Chambers, as the 4th Respondent/Intervener, argued (through their solicitors Messrs Josephine LK Chow & Co) that they have ceased acting for D1 and therefore they have no locus standi to continue holding the monies. In that position, they should not be compelled to resume the stakeholder role as their duties as stakeholders were discharged when they released the monies pursuant to the summary judgment.

I accept these submissions. Messrs Cheong Chambers no longer has any solicitor-client relationship with D1, nor is it involved in the proceedings. As such, they should not be burdened with continuing obligations as stakeholders, given legitimate professional concerns about holding monies for a former client.

While it is true that the Original Undertaking was given by Messrs Cheong Chambers, that undertaking must be understood in its proper context: it was an undertaking given in their capacity as solicitors for D1. Once that relationship terminated, so did the basis for the undertaking.

Moreover, Messrs Cheong Chambers fully performed their obligations under the Original Undertaking by holding the Disputed Monies from February 2023 to February 2025 by placing them in a fixed deposit account and releasing them only upon specific instruction pursuant to a court order.

To compel Messrs Cheong Chambers to resume holding the Disputed Monies would impose obligations on a non-party, potentially create conflict of interest issues and may be inconsistent with the Legal Profession (Practice and Etiquette) Rules 1978.

Accordingly, I allow this appeal with costs and make the following orders whereby the Sessions Court decision dated 6 November 2025 is set aside. It is ordered that:

Within 14 days, Appellant shall pay RM164,758.63 into an interest-bearing account maintained by D1 solicitors, i.e. Messrs S F Chan & Co, as stakeholders. Messrs Cheong Chambers are therefore released, as they are no longer the solicitors appointed by D1 to act for them. As per their earlier letter of 27.2.2023, I take it to be instructions from D1. The same instructions would bind the current solicitors unless otherwise expressed, which is not the case here.

The said sum shall be held as stakeholder sum pending the full and final determination of Appellant's counterclaim in Sessions Court Civil Suit No. WA-B52NCvC-481-11/2022.

Payment into Court is appropriate where there exists the acrimonious nature of the proceedings, the mutual distrust between the parties, the absence of an appropriate neutral stakeholder and the need for absolute certainty that the monies will be available to satisfy the final judgment. Since there is an available stakeholder to replace Messrs Cheong Chambers, D1's solicitors, Messrs S F Chan & Co, are suited to replace them, and I order accordingly. Dated: 15 April 2026 Arziah binti Mohamed Apandi Judicial Commissioner Kuala Lumpur High Court NCvC 8 Wilayah Persekutuan Kuala Lumpur Appellant Counsel: Ms Eva Chang Chon Peng Messrs S F Chan & Co Kuala Lumpur Tel. No.: 03-2732 2728 Email: general@sfemchan.com $ 1^{\mathrm{st}} $ until $ 3^{\mathrm{rd}} $ . Respondent Counsel: Ms Amanda Chi Hwei Ling Messrs Bhavanash Sharma Kuala Lumpur Tel. No.: 03-2694 1089 Email: bhavanashharma@gmail.com 4th. Respondent Counsel: Mr. Ngo Jun Yan Messrs Josephine L K Chow & Co. Kuala Lumpur Tel. No.: 03-7727 3800 Email: lawyerskl@josephinelkchow.com Cases referred: Sebaya Sdn Bhd v Syarikat Bekerjasama Ladang Kelapa Sawit Pegawai-Pegawai Negeri Pahang Berhad [1979] 1 LNS 91 FC Tan Sri Dato' Dr Awang Had Salleh & Anor v Dato' Dr Hj Mohamed Haniffa Hj Abdullah [2007] 5 CLJ 565 CA Karunamoorthy Ramasamy v Hariharan Subramaniam & Ors [2020] 1 LNS 1400 HC Gan Yook Chin & Anor v Lee Ing Chin & Ors [2004] 2 MLRA 1 FC Tay Keong Kok & Ors V Eastmont Sdn Bhd & Another Appeal [2025] 1 MLRA 85 CA Vital Living Empire Sdn Bhd & Ors v Elegant Group Sdn Bhd [2024] CLJU 1825 HC; Acts/Law referred: