Low Jee Keong v Next Fortune Sdn. Bhd. (BA-22NCvC-145-04/2024)

This Court had allowed the Plaintiff’s application to enter summary judgment against the Defendant on 16 January, 2025 (see Low Jee Keong v Next Fortune Sdn Bhd [2025] AMEJ 0596; [2025] CLJU 149; [2025] MLJU 189). The Defendant had made an oral application for a stay of execution after judgment was pronounced and this was refused by this Court. The led the Defendant into filing the present application in Enclosure 33 on 21 March, 2025, seeking a stay of execution pending appeal pursuant to Order 45 rule 11 and/or Order 92 rule 4 of the Rules of Court 2012. 11/07/2025 09:37:03 BA-22NCvC-145-04/2024 Kand. 48

The sole issue for determination is whether this is a proper case for this Court to exercise its discretion to grant a stay of execution pending appeal by the Defendant to the Court of Appeal against this Court’s decision in granting summary judgment to the Plaintiff.

This Court made the following orders following the application by the Plaintiff for summary judgment against the Defendant on 16 January, 2025: a. Judgment sum of RM13,915,172.05; b. Interest at 6.5% per annum on RM10,426,338.80 from 23.02.2024 until full payment; and c. Costs of RM20,000.00.

The Defendant contended that its appeal would be rendered nugatory if the stay of execution that it is seeking in Enclosure 33 were disallowed.

It was argued by the Defendant that if execution were allowed to proceed “particularly through the winding-up proceedings already initiated by the Plaintiff”, the consequences for the Defendant would be grave and 3 irreversible. According to the Defendant, if it were to succeed in its appeal, its “operations, corporate structure, and business reputation would have already been decimated”, thus rendering the appeal “nugatory and academic”.

The Defendant relied on Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2004] 1 AMR 417; [2004] 1 CLJ 239; [2004] 1 MLJ 257; [2003] 2 MLRA 268. (“Kosma Palm Oil”), Kerajaan Malaysia v Jasanusa Sdn Bhd [1995] 2 AMR 1477; [1995] 2 CLJ 701; [1995] 2 MLJ 105; [1995] 1 MLRA 213 (“Jasanusa Sdn Bhd”), Mohamed Mustafa v Kandasami (No 2) [1979] 2 MLJ 126; [1979] 1 MLRA 304 and Mammoth Empire Construction Sdn Bhd v Kenwise Sdn Bhd [2021] AMEJ 0072 ; [2021] CLJU 31; [2021] MLJU 73; [2021] 2 MLRH 132 to support its application.

The Defendant highlighted the following circumstances which it considered as underscoring “the risks of the appeal being rendered nugatory”, that is: a. Ongoing Possession of the Properties: The Plaintiff remains the registered and beneficial owner of eight (8) semi-detached units that are the subject of the dispute. These units were part of the investment arrangement underlying the agreements between the parties. Without a stay, the Plaintiff may enforce the full judgment sum without returning or accounting for these Properties thereby depriving the Defendant of any meaningful redress even if the appeal succeeds. 4 b. Threat of Winding-Up: The Plaintiff has issued a statutory notice of winding-up based on the judgment sum whereby the Winding-up Petition has been also been filed and the Hearing has been fixed on 17-07-2025. If carried out, this would not only cripple the Defendant’s operations but also irreversibly damage its commercial standing, financing arrangements, third-party obligations, together with the disruption in the Defendant’s process of obtaining the Individual Title for the said development. The winding-up would effectively bring the Defendant’s legal and commercial existence to an end. c. Balance of Convenience Favouring the Defendant: The Defendant’s appeal is not frivolous or vexatious. It raises serious and arguable points of law and fact, including the characterisation of the underlying agreements and whether the Plaintiff is entitled to enforce payment in full while retaining valuable assets. Conversely, the Plaintiff faces no pressing prejudice if enforcement is deferred, especially given its continued possession of the Properties. Also, given the Defendant’s current status as a property developer actively involved in the process of obtaining individual titles for the semi-detached units forming the subject matter of the dispute. If the stay is not granted, and execution or winding-up proceedings are allowed to proceed, the Defendant’s ability to complete the title issuance process would be materially disrupted. This, in turn, would cause downstream complications for purchasers, financiers, and other stakeholders reliant on the registration of titles, potentially 5 affecting innocent third parties and jeopardising the completion and sale of the properties.

Still on the nugatory ground, the Defendant also alluded to the fact that the pending winding-up proceedings, and the Defendant’s active role as a property developer with obligations to third parties underscores the gravity of the situation.

The Defendant also advanced the argument that “execution at this stage would irreparably disrupt the Defendant’s ability to vindicate its position on appeal and cause permanent harm to its business and stakeholders”.

As for the existence of special circumstances ground, the Defendant drew this Court’s attention to following circumstances, which it regarded as “compelling factors” that “demonstrate the presence of special circumstances justifying a stay of execution”, namely: a. Scheduled Hearing of the Appeal: The Defendant has filed its Notice of Appeal against the summary judgment and the appeal has been fixed for hearing on 18.09.2025. The Defendant’s challenge is not speculative as it is live, active, and pursued with diligence. b. Ongoing Control of the Properties by Plaintiff: The Plaintiff continues to hold legal and beneficial ownership of eight (8) semi-detached units, which were central to the parties’ investment arrangement. Notwithstanding this, the Plaintiff 6 now seeks to enforce the entire judgment sum without restoring or accounting for the value of the units retained. c. Double Recovery and Unjust Enrichment: The enforcement sought by the Plaintiff would result in a double recovery as firstly, through the retained value of the Properties, and second, through the full enforcement of the judgment sum. Such circumstances amount to a gross imbalance and would unjustly enrich the Plaintiff to the Defendant’s detriment. These factors, according to the Defendant, “clearly demonstrate that the Defendant’s case is not an ordinary application for a stay but one which is supported by special, exceptional, and compelling circumstances”.

With regards to the third ground of irreparable harm if stay is not granted, the Defendant underscored the point that it “would be exposed to immediate and irreparable harm” as “the Plaintiff has already issued a statutory notice of winding-up under Sections 465 and 466 of the Companies Act 2016, relying on the judgment sum”. The argument advanced by the Defendant was that If the Plaintiff were allowed to proceed with the winding-up petition, “the Defendant faces the prospect of liquidation, loss of business relationships, reputational harm, and the collapse of its operational structure”.

As its penultimate ground, the Defendant submitted that “the balance of convenience overwhelmingly favours the grant of a stay”. The Defendant reasoned that “the consequences to the Defendant if a stay is refused are far more severe, far-reaching, and irreparable compared to any temporary delay that may be occasioned to the Plaintiff by the stay”.

Once again the Defendant proceeded to highlight the grave consequence of a winding-up petition by submitting as follows: If the stay is denied, and the Plaintiff proceeds with execution particularly by pursuing winding-up which the Defendant’s operations may collapse entirely. This includes: a. The potential loss of all banking and credit facilities, as financial institutions are unlikely to extend or maintain credit to a company subject to winding-up proceedings; b. Immediate termination of construction, supply, and service contracts due to cross-default clauses or reputational concerns; c. Severe damage to goodwill, standing, and market confidence, which are essential to the Defendant’s ability to operate and fulfil its obligations to other stakeholders; d. Disruption to employees, subcontractors, and clients whose interests are closely tied to the Defendant's continued business existence.

Last but not least, the Defendant contended that its appeal is not without merit in that the appeal raises bona fide and serious questions of law and fact.

In resisting the Defendant’s application for a stay of execution of the judgment, the Plaintiff advanced the following arguments.

First, the Plaintiff refuted the Defendant’s contention that if this stay application were not allowed, it would lead to “double recovery and unjust enrichment” by and on the part of the Plaintiff. The Plaintiff pointed out that the 8 properties held by the Plaintiff are meant to be a collateral to the debts owed by the Defendant to the Plaintiff as per the terms under a final Settlement Agreement and that the Plaintiff is willing, able and duty bound to transfer the 8 properties to the Defendant upon the settlement of the summary judgment sum.

Second, the Plaintiff disputed the Defendant’s contention that no prejudice will be suffered by him should a stay be allowed. The Plaintiff averred that he would suffer great prejudice if barred from enjoying the fruits of litigation.

In contesting the nugatory argument, the Plaintiff argued that the summary judgment is for a liquidated sum and if the Defendant were to succeed in its appeal, “the Plaintiff would have to pay back the judgment sum”. More importantly, the Plaintiff submitted that there was no evidence deposed by the Defendant to show “that the Plaintiff is a man of straw and there is a very high chance that he would not be able to pay back the said judgment sum”.

In response to the “irreparable damage to the Defendant” ground if the Plaintiff were to proceed with the winding-up proceedings, the Plaintiff 9 relied on Maril-Rionebel (M) Sdn Bhd & Anor v Perdana Merchant Bankers Bhd and other appeals [2001] 3 AMR 2893; [2001] 3 CLJ 248; [2001] 4 MLJ 187, [2001] 1 MLRA 270, for the proposition that “a petition for winding up is not execution. The Plaintiff also cited Juara Aspirasi (M) Sdn Bhd v Tan Soon Ping [2011] CLJU 1952; [2012] 1 MLJ 50; [2011] 3 MLRA 29 which held that “bankruptcy and winding up proceedings were not within the ambit and meaning of 'execution' proceedings as provided by O 46 r 1 of the Rules of the High Court 1980”. Hence, the Plaintiff submitted that any filing of a winding up petition against the Defendant has no bearing or relevance to the present stay application.

It is well established that the filing of an appeal does not in itself operate as an automatic stay of execution. The general rule that the judgment creditor is entitled to enforce the judgment can be traced to section 73 of the Courts of Judicature Act 1964 which provides as follows: Appeal not to operate as stay of execution

An appeal shall not operate as a stay of execution or of proceedings under the decision appealed from unless the court below or the Court of Appeal so orders and no intermediate act or proceeding shall be invalidated except so far as the Court of Appeal may direct. [21] The Defendant in the present case has relied on Order 45 rule 11 of the Rules of Court 2012 which provides as follows: Matters occurring after judgment: Stay of execution (O. 45, r. 11)

Without prejudice to Order 47, rule 1, a party against whom a judgment has been given or an order made may apply to the Court for a stay of execution of the judgment or order or other relief on the ground of matters which have occurred since the date of the judgment or order, and the Court may by order grant such relief, and on such terms, as it thinks fit. [22] It is trite law that the principles governing the granting of a stay, as encapsulated in the above provisions (together with the provision in Order 55 rule 16 of the Rules of Court – governing appeals to the High Court from Subordinate Courts) confer discretion on the court to grant a stay of execution and most importantly, such exercise of the court’s discretion is dictated by the “special circumstances” rule. [23] As observed by the Supreme Court in Jasanusa Sdn Bhd: 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. [24] In Kosma Palm Oil, the Federal Court explained that “special circumstances is the genus of which nugatoriness is a species”. The Federal Court also held in no uncertain terms that “the merits of a party’s case in a stay application is not a relevant matter for consideration” (para 18). And at paragraph 22, the Federal Court said that it was “therefore unnecessary … to consider the merits of the respective case of the applicants and respondents” and added that: 23 The onus is on the applicants to demonstrate the existence of special circumstances to justify the grant of a stay of execution. The reasons must relate to the enforcement of the judgment. The Decision of this Court [25] With the established legal principles in mind, this Court has addressed each of the grounds raised by the Defendant in support of its application for a stay of execution of the judgment obtained by the Plaintiff. [26] The grounds concerning the merits of the appeal are without merit and are hereby dismissed. [27] The central premise of the Defendant’s case in support of its application for a stay is the Plaintiff’s impending filing of a winding-up petition. During oral submissions, counsel for the Defendant argued that a judgment creditor should be precluded from utilising the winding-up mechanism to exert undue pressure on a judgment debtor. This Court finds such an argument perplexing. In the Court’s view, parties are entitled to avail themselves of the full range of remedies provided under the law. [28] It is not disputed that the filing of a winding-up petition carries serious consequences and may cause irreparable harm to a company such as the Defendant in this case. The commencement of such proceedings would undoubtedly result in severe legal and commercial repercussions. If the essence of the Defendant’s grievance is the threat of a winding-up petition, the appropriate legal remedy is for the Defendant to apply for a Fortuna injunction to prevent any abuse of the winding-up process. Such an application may then be judicially assessed on its merits. [29] Having carefully considered the parties’ submissions, the factual matrix, and the relevant legal authorities, this Court finds no special circumstances justifying the grant of a stay. [30] Accordingly, the application in Enclosure 33 is dismissed with costs of RM7,000. Dated: 7 July, 2025 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Goik Kenzy for the Plaintiff (Messrs. Jacinta Kenzy) Ganesh a/l Magenthiran with Alissa binti Mohd Sabri for the Defendant (Messrs. Ganesh Azhar & Associates)