LITS Solutions Sdn Bhd v 1. ) Lai Thiam Sin (PA-22NCvC-252-12/2019)

LAI THIAM SIN (NRIC No.: 780919-08-5821)

LEADING INNOVATIVE TECHNOLOGIES & SYSTEMS SDN. BHD. (Company No.: 1212539-X) … DEFENDANTS JUDGEMENT A.

This is the Defendants’ Notice of Application dated 3 March 2025 under Enclosure 110 for a stay of execution of the Court’s Order dated 23 December 2024, which allowed part of the Plaintiff’s prayers in Suit No. PA-22NCVC-252-12/2019 pending 13/10/2025 17:03:16 PA-22NCvC-252-12/2019 Kand. 130 the full and final disposal of the Defendants’ appeal to the Court of Appeal. B.

Suit PA-22NCVC-252-12/2019, the Plaintiff (LITS Solutions Sdn Bhd) was initiated pursuant to the Leave granted to file the Derivative Action obtained on 20.11.2019. In summary the Plaintiff seeks for a declaration, damages and an injunction from marketing promoting and/or taking any projects using the “Flexi Parking” system. On 6.1.2021, The 1st Defendant (Lai Thiam Sin) being the Petitioner has filed Winding Up Petition No. PA-28NCC- 1-01/2021 against the Plaintiff (LITS Solution Sdn Bhd) after leave was granted to the Plaintiff to file a derivative action. Both suits PA-22NCvC-252-12/2019 and PA-28NCC-1-01/2021 were heard together.

After a full trial, the Court on 23 December 2024 made the following Order: [a] the Plaintiff’s claim was substantially allowed with costs. [b] D1’s Winding up Petition was dismissed with costs. As against D1: [a] D1 shall pay to the Plaintiff the sum of RM18,212,992.00, being the amount found due from him to the Plaintiff upon the taking of accounts; and [b] Interest at the rate of 5% per annum on the said sum of RM18,212,992.00 from the date of Judgment until full settlement. As against D2: [a] D2 shall pay to the Plaintiff the sum of RM18,212,992.00, being the amount found due to the Plaintiff upon the taking of accounts; and [b] Interest at the rate of 5% per annum on the said sum of RM18,212,992.00 from the date of Judgment until full settlement. As against D1 and D2 jointly and severally: [a] D1 and D2 are jointly and severally liable to pay the Plaintiff the sum of RM18,212,992.00, together with interest at the rate of 5% per annum from the date of Judgment until full settlement.

Being dissatisfied with the aforesaid decision, the Defendants filed a Notice of Appeal against the Judgment. Subsequently, and without undue delay, the Defendants filed the present application for stay of execution on 3 March 2025, pending the full and final disposal of their appeal to the Court of Appeal. C.

The Defendants submits that there exist special circumstances warranting the grant of a stay. If execution of the Judgment is not stayed, D2 would be compelled to pay the Judgment Sum of RM 18,212,992.00, a sum exceeding its liquid assets and current financial capacity which would cause it to cease operations. D1, likewise, lacks the financial ability to satisfy the Judgment Sum, given his existing credit facilities and low credit standing. The resulting cessation of D2’s operations would render the pending Appeal wholly nugatory and deprive the Defendants of any practical benefit even if the Appeal were successful.

Further, if the Defendants are compelled to satisfy the Judgment, D2 would be forced to liquidate its assets, terminate its operations, and lay off employees, resulting in permanent loss of business, goodwill, and ongoing contracts with numerous municipalities and government agencies. These losses cannot be adequately compensated by damages or reversed if the Appeal succeeds. By contrast, the Plaintiff being a dormant entity faces no such prejudice if a stay is granted.

The Defendants asserts that the balance of convenience clearly favours the grant of a stay. Refusal of a stay would cause substantial harm not only to the Defendants but also to numerous municipalities, agencies, and the public at large who rely on D2’s enforcement parking systems. The Plaintiff, by comparison, stands to suffer no tangible harm if the execution of the Judgment is temporarily suspended pending the determination of the Appeal.

The Defendants further submit that given the Plaintiff’s dormant status and the absence of any evidence of its financial standing, there exists a real risk that restitution may not be possible if the Defendants succeed on appeal. This further supports the Defendants’ contention that execution should be stayed to preserve the integrity of the appellate process.

For the foregoing reasons, the Defendants submit that this is a fit and proper case for the exercise of the Court’s discretion to grant a stay of execution. The Defendants have demonstrated the existence of special circumstances, the risk of the appeal being rendered nugatory, and that the balance of convenience favours maintaining the status quo pending the disposal of the Appeal.

The Plaintiff submits that the Defendants are not entitled to a stay of execution of the Judgment dated 23 December 2024, which is principally a monetary judgment rendered after a full trial on the merits. The Defendants have failed to demonstrate any special circumstances that would justify a stay of execution pending the disposal of their Appeal. It is trite law that a successful litigant is entitled to the fruits of his litigation, and an unsuccessful party is not permitted to postpone payment of a judgment sum merely by filing an appeal. The law does not require the successful party to wait until all avenues of appeal are exhausted before recovering the judgment debt. Unless and until special circumstances are shown, the judgment creditor is entitled to enforce the judgment as of right.

The balance of convenience lies firmly against the granting of a stay. The Defendants, who have benefitted from and unjustly enriched themselves at the expense of the Plaintiff, cannot now be heard to complain that their Appeal would be rendered nugatory if compelled to pay the Judgment Sum. The Defendants’ reliance on D2’s financial position as reflected in the audited accounts for the financial year ended 31 December 2023 is misplaced. The Defendants’ current financial predicament is self-inflicted, arising directly from D1’s own breach of fiduciary duties to the Plaintiff and the diversion of the Plaintiff’s business and contracts to D2. The Defendants should not be permitted to rely on their own wrongful acts as a ground to seek equitable relief in the form of a stay.

Furthermore, the Audited Report and Financial Statements for the year ended 31 December 2023, exhibited by the Defendants, are not reflective of D2’s actual financial standing. These accounts are neither the latest nor a true reflection of D2’s cumulative profits since its incorporation on 15 December 2016, during which period D2 had unlawfully profited from the Plaintiff’s diverted business opportunities. The Defendants have failed to make full and frank disclosure of their current financial position. D2 has other shareholders and directors apart from D1, who are capable of contributing capital or raising funds to satisfy the Judgment Sum. Accordingly, the Defendants cannot rely on their incomplete financial disclosure to ground their application for stay.

The Plaintiff also submits that D1, on his part, has not disclosed his assets or financial capacity. Having been found to have breached his fiduciary duties and profited therefrom, D1 cannot now claim financial incapacity as a reason for a stay. His inability or unwillingness to pay the Judgment Sum is not a special circumstance in law. The Defendants’ contention that D1 would suffer irreparable harm or that the Appeal would be rendered nugatory is misconceived. Any alleged hardship stems from D1’s own misconduct and cannot be a basis for equitable relief. It is well established that a party in breach cannot rely on his own wrongdoing to seek indulgence from the Court.

The balance of convenience again favours the Plaintiff. The Plaintiff will suffer serious prejudice and injustice if a stay is granted, as such a stay would effectively condone the continuing breaches of D1 and D2. Granting a stay would allow D1 and D2 to persist in operating and profiting from the Flexi Parking application and enforcement systems that rightfully belong to the Plaintiff, thereby perpetuating the very wrongdoing for which the Court has already found them liable. The Plaintiff has been awaiting justice for more than five (5) years and has obtained a monetary judgment after due trial. There is no justification to delay its enforcement. The Defendants’ allegations of reputational harm and loss of goodwill are without merit, as their business activities are founded upon unlawful appropriation of the Plaintiff’s intellectual property and business opportunities.

In conclusion, the onus rests squarely upon the Defendants to demonstrate the existence of special circumstances justifying a stay of execution. Such circumstances must be special, exceptional, and directly related to the enforcement of the judgment, not ordinary or self-induced. The Defendants have wholly failed to discharge this burden. Accordingly, the Plaintiff submits that the Defendants’ application for stay of execution ought to be dismissed with costs. E.

The applicable legal principles governing an application for stay of execution pending appeal are well established. The general rule is that a successful litigant is entitled to the fruits of his judgment; therefore, a stay will only be granted in special or exceptional circumstances. The starting point is that an appeal does not operate as a stay, and the burden rests upon the applicant to show the existence of special or exceptional circumstances that would justify the exercise of the Court’s discretion to grant a stay. In a nutshell, a stay is legally defined as the suspension of a case or certain designated proceedings within it. (see Black’s Law Dictionary, Henry Campbell Black, 6th Ed., 1990, West Publishing Co., p.1413). The guiding principles governing the grant or refusal of a stay are as follows: [a] The Court retains broad judicial discretion whether to grant or refuse a stay, anchored on established judicial principles. That the applicant would suffer irreparable loss or prejudice if the stay is refused and that the balance of convenience lies in favour of granting the stay. [b] The degree of importance ascribed to any factor pleaded depends on the facts and circumstances of each case (Mohamed Mustafa v Kandasami [1979] CLJU 53; [1979] 1 MLJ 126). [c] That there are special circumstances which justify the granting of a stay. It is trite that a court has discretion to allow the application in favour of the unsuccessful litigant if there are special circumstances justifying the stay. Special circumstances, as the phrase implies, must be special under the circumstances as distinguished from ordinary circumstances. It must be something exceptional in character, something that exceeds or excels in some way that which is usual or common. (Ming Ann Holdings Sdn Bhd v Danaharta Urus Sdn Bhd [2002] 3 CLJ 380; [2002] 3 MLJ 49; Kosma Palm Oil Mill Sdn Bhd ([2004] 1 MLJ 257); Government of Malaysia v Datuk Haji Kadir Mohamad Mastan and another application [1993] 3 MLJ 514 [d] The Rules of Court 2012 contain no specific definition of special circumstances; the expression denotes an exceptional situation, the assessment of which lies within the sound judicial discretion of the Court (Leong Poh Shee v Ng Kat Chong [1965] CLJU 90; [1966] 1 MLJ 86). [e] The category of special circumstances is not closed; from time to time and case to case, different and various factors may be accepted as constituting such circumstances (Low Nam Hui & Sons Sdn Bhd v

Having heard submissions from both parties, I find that there exist special circumstances which justify this Court in allowing the Defendants’ application for stay of execution. As established in the authorities above, the list of factors constituting “special circumstances” is neither exhaustive nor closed and must depend on the particular facts of each case.

In this instance, I find that the Defendants’ appeal would be rendered nugatory if they are compelled to pay the judgment sum pending the disposal of the appeal. This finding is directly related to the Defendants’ financial standing and the nature of their business.

In the unreported case of Renew Capital Sdn Bhd & Ors v ADM Ventures (M) Sdn Bhd & Anor and another appeal [2022] CLJU 26; [2022] 1 LNS(O) 26 and [2022] CLJU 27; [2022] 1 LNS(O) 27.] [2022] the Federal Court unanimously allowed the appellants’ appeal and granted an unconditional stay of execution in respect of a money judgment amounting to RM22,666,195.16, having found that the appellants would otherwise suffer irreparable prejudice if compelled to make payment before the appeal was determined.

Notably, at the Court of Appeal stage in Renew Capital & Ors v ADM Ventures (M) Sdn Bhd & Anor and another appeal [2022] 8 CLJ 817 [2022] 1 LNS 1124 had observed as follows: “[83] This court was asked to take notice of the fact that a payment of the sum of RM22,666,195.16 would necessarily involve a significant change of position, including the liquidation of assets, the impact of which would not be remediable if the appeals are determined in favour of the appellants given the impact of the Covid-19 pandemic on the economy. It was further argued that it is pertinent as the central question for any court hearing an application for a stay of execution is: what if the appellate court reverses the first instance decision? [84] The concerns raised, though cannot justify a total unconditional stay of execution of a judgment debt, are nevertheless valid concerns which this court must address. Whilst it is not for us at this stage to enter into and entertain the merits of the appeal, we must nevertheless accept the fact that there are appeals that are successful with the result that the trial court had been held to be wrong and so the judgment set aside and with that the need to refund the judgment sum earlier paid on a failure to get an unconditional stay of execution of the judgment debt.”

Similarly, in the present case, upon perusing the audited accounts of D2 from its incorporation in 2017 to 2023, it is evident that D2 has never achieved a profit comparable to the judgment sum. The same applies to D1’s financial position. The Defendants’ financial condition is neither promising nor does it.

Without a stay, if the Defendants are compelled to satisfy the judgment sum, D2 would be forced to significantly downsize its operations or even cease business altogether. This would cause irreparable damage to the Defendants’ various business operations involving the Flexi Parking mobile application and enforcement system. If the appeal subsequently succeeds, the Defendants would have suffered irremediable harm by then.

In Re Kong Thai Sawmill (Miri) Sdn Bhd [1976] 1 MLJ 131, the Federal Court held that payment of a judgment debt which would destroy the substratum of the appeal is an example of a case where the appeal would be rendered nugatory if a stay were refused.

In light of the Defendants’ financial position and the nature of their business, I am satisfied that the balance of convenience lies in favour of granting a stay. Accordingly, I find that special circumstances exist in this case to justify the stay sought. Based on the reasons stated above, the Defendants’ application under Enclosure 110 is allowed, with costs in the cause. Bertarikh 13 Oktober 2025 SGD (Rozana binti Ali Yusoff) Hakim Mahkamah Tinggi Pulau Pinang Kompleks Mahkamah Pulau Pinang Pulau Pinang Peguam bagi pihak Plaintif : Karin Lim A. Suppiah David Tan Hong Kai Tetuan Presgrave & Matthews Peguam bagi pihak Defendan: