Maa Credit Berhad v Best Birdnest Sdn Bhd (WA-22NCC-183-04/2023)

BEST BIRDSNEST SDN BHD [Company No: 200701017215 (775224-T)]

GREENPOWER VALUE SDN BHD [Company No: 201201027225 (1011715-V)]

DATUK LIM SUE BENG [NRIC No: 641119-10-6073]

LEE SIAH SIAN @ LEE HAY HIAN [NRIC No: 420518-06-5169] ... DEFENDANTS JUDGMENT (Enclosures 80, 84 and 86) [1] This was 3 applications by the 1st, 2nd and 3rd Defendants (“Defendants”) respectively for stay of execution of the Judgment and Order dated 8.12.2023 pending their appeals to the Court of Appeal (collectively “the Applications”). [2] After considering the submissions of all parties and the applicable legal principles, I allowed a conditional stay. My reasons are as state below. Page 2 of 11 A] SALIENT BACKGROUND FACTS [3] The salient facts leading to the Applications are as stated below. [4] The Plaintiff granted a loan of RM24,500,000.00 to the 1st Defendant pursuant to a Moneylending Agreement dated 13.7.2021 (“the Agreement”). [5] The 2nd, 3rd and 4th Defendants executed guarantees to secure repayment of the loan. [6] Third party charges were provided by Alam Pahlawan Sdn Bhd over land held under HS(D) 37724 PT 183 and by Pavilion Yields Sdn Bhd over 85,720,189 units of redeemable convertible secured notes in Gula Perak Berhad (“Third Party Securities”). [7] The loan was disbursed on 16.7.2021 and was due for repayment on 16.12.2021. [8] The 1st Defendant defaulted in repaying the loan. On 31.3.2023, the 1st Defendant issued a cheque for RM200,000.00 to the Plaintiff together with a letter stating it would devise a repayment proposal by 31.5.2023. [9] However, as no further payment were forthcoming, on 4.4.2023, the Plaintiff commenced this action against all Defendants. [10] On 31.5.2023, the Plaintiff filed a summary judgment application (Enclosure 10). The Plaintiff also filed an application to strike out the 1st and 2nd Defendants’ Counterclaims (Enclosure 29). [11] On 8.12.2023, this Court allowed Enclosures 10 and 29 and essentially ordered the Defendants to pay: i) The sum of RM31,776,003.47 due as at 23.5.2023; ii) Interest on RM24,500,000.00 at 10% per annum from 24.5.2023 until full settlement; iii) Interest on RM25,526,986.30 at 8% per annum from 24.5.2023 until full settlement. Page 3 of 11 [12] Being dissatisfied, the Defendants filed appeals to the Court of Appeal (“the Appeals”) and thereafter filed these applications for stay of execution pending disposal of their appeals. B] THE DEFENDANTS’ ARGUMENTS [13] The Applications consist of: i) Enclosure 80: The 1st Defendant’s stay of application dated 19.1.2024; ii) Enclosure 86: The 2nd Defendant’s stay application dated 22.1.2024; and iii) Enclosure 84: The 3rd Defendant’s stay application dated 22.1.2024. [14] The main grounds relied upon by the Defendants can be summarised as follows: i) The Appeals raise novel issues of law regarding: a) Whether the Plaintiff can charge interest at 10% per annum on the principal sum after the loan duration has lapsed; b) Whether there were breaches of the Moneylenders Act 1951 and Moneylenders (Control and Licensing) Regulations 2003 that would render the Agreement void and unenforceable; c) Whether the Plaintiff's claim was premature given the 1st Defendant’s payment of RM200,000 and request for time to propose a repayment scheme. ii) If stay is not granted: a) The Defendants face potential winding up proceedings before the Appeals can be heard; Page 4 of 11 b) The appeals would be rendered nugatory; c) The Defendants would suffer irreparable damage as the judgment sum is substantial; d) There are doubts about the Plaintiff’s ability to repay the judgment sum if the appeals succeed. iii) The Plaintiff would not be prejudiced as it can be compensated by costs and interest if the appeals fail. The Plaintiff also has the Third Party Securities. C] THE PLAINTIFF’S RESPONSE [15] The Plaintiff opposed the applications on the following grounds: i) The Defendants failed to demonstrate special circumstances as: a) The merits and alleged novel issues in the appeals are irrelevant considerations based on Kosma Palm Oil Mill Sdn Bhd & Ors v. Koperasi Serbausaha Makmur Bhd [2004] 1 MLJ 257; b) There is no distinction between principles governing stay for judgments obtained after full trial versus summary judgment; c) That the claim involves large sums of money and potential execution processes are not special circumstances; d) The Plaintiff is financially sound with paid-up capital of RM62.5 million and no financial commitments as at 31.12.2023. ii) The Plaintiff has been severely prejudiced by non-repayment of the loan for over 2 years, receiving only RM200,000 to date. iii) The Defendants’ allegations about the Plaintiff's financial position are speculative and unsupported by evidence. Page 5 of 11 D] ANALYSIS AND DECISION [16] The law on stay of execution is well established. Section 73 of the Courts of Judicature Act 1964 provides that an appeal shall not operate as a stay of execution unless ordered by the Court. The Court’s power to grant stay is also provided under Order 45 Rule 11 and Order 92 Rule 4 of the Rules of Court 2012. [17] The applicable principles were comprehensively set out by the Federal Court in Kosma (supra): i) The onus is on the applicant to demonstrate special circumstances to justify granting a stay; ii) The reasons must relate to enforcement of the judgment and must be deposed in the supporting affidavit; iii) Special circumstances may include situations where the appeal would be rendered nugatory if stay is refused; iv) The merits of the appeal are not a relevant consideration in a stay application. [18] The threshold for granting a stay of execution is high. As established in Kosma (supra), the onus lies on the applicants to demonstrate special circumstances justifying a stay. The Federal Court held that the reasons must relate to enforcement of the judgment and must be properly deposed in affidavit evidence. [19] The Plaintiff has legitimate concerns about further delay in recovering its loan, having received only RM200,000 over two years. A successful litigant should not be lightly deprived of the fruits of litigation (Serangoon Garden Estate Ltd v. Ang Keng [1953] 1 MLJ 116). [20] I do see that irreparable harm would befall the Defendants if a stay is not granted (Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd [2002] 3 MLJ 49). An example of what constitutes irreparable harm can be seen in Salim Bin Ismail & Ors v. Lebbey Sdn Bhd (NO 1) [1997] 2 MLJ 1 where Court of Appeal held that Page 6 of 11 the imminent destruction of the respondent’s home is considered harm which cannot be compensated with money: “In deciding whether to grant a stay, we have to balance the financial repercussions which will be suffered by Lebbey with the imminent destruction of the homes of the applicants if the orders appealed against are enforced. The subject-matter of this appeal from the applicants’ point of view is their continued right to stay in their homes until their claims have been finally disposed of in a full trial. The destruction of that right cannot be adequately compensated with money. This is a special reason why a stay should be granted. Lebbey's counsel requested that the court only grant a conditional stay and require the applicants to deposit RM1m if a stay is to be granted. We did not think that such a request was realistic.” (own emphasis added) [21] In the present case, the Defendants’ grievance is only monetary. In this regard, the Court of Appeal in Ming Ann (supra) held as follows: “It must be remembered that the judgment is a money judgment. There is not even an allegation, what more evidence, that the respondent is not in a financial position to repay the applicant if it need be. And bear in mind that the respondent is Danaharta Urus Sdn Bhd. The grounds relied on by the appellant are nothing more than 'fear of losing'; fear of losing business, fear of losing customers, fear of losing suppliers, fear of losing goodwill, fear of not being able to collect its debts from third parties, in case the appellant company is wound up. All that the applicant has to do to avoid such 'fears' is to settle the judgment debt.” (own emphasis added) [22] Further, I am not persuaded by the Defendants’ arguments regarding the Plaintiff’s alleged financial position. The search results show the Plaintiff is well-capitalised with RM62.5 million paid-up capital and no financial commitments. Mere assertions about potential inability to repay without clear evidence cannot justify an unconditional stay (Capitol Avenue Development Sdn Bhd v. Gamwon Properties Sdn Bhd [2021] CLJU 528). Page 7 of 11 [23] Having considered the submissions and cited authorities, I find that there are insufficient grounds to grant an unconditional stay, as the Defendants have not demonstrated the existence of special circumstances. [24] However, I am inclined to grant a conditional stay of execution instead. A conditional stay was considered at length in the case of China Harbour Engineering Company Ltd v. Lunar Shipping Agencies Sdn Bhd [2016] MLJU 1252. In granting the conditional stay of execution the High Court in China Harbour (supra) held as follows: “[36] I am of the following view:

if an applicant can discharge the legal onus to satisfy the Court the existence of special circumstances regarding the execution of the order or judgment in question, an absolute (without any condition) stay of execution of the order or judgment should be granted (Absolute Stay); ……. “(4) if an applicant cannot satisfy the Court the existence of special circumstances regarding the execution of the order or judgment, the Court may still exercise its discretion under s 73 CJA and r 13 RCA read with s 40(1) IA, to grant a Conditional Stay. I am in favour of the Court’s exercise of discretion to grant a Conditional Stay for the following reasons –

if a judgment debtor cannot fulfil the condition imposed by the Conditional Stay, there will not be a stay of execution of the order or judgment in question. In such an event, the judgment creditor is not prejudiced because the judgment creditor is at liberty to execute the order or judgment; and

if the condition stated in the Conditional Stay can be satisfied by the judgment debtor, the following “benefit” may entail –

the judgment debtor is spared of the time, costs and effort to file another application in the appellate court for a stay of execution of the order or judgment (2nd Stay Application);

(ii) the judgment creditor has the “assurance” (not security as the judgment debt may be an unsecured one and is subject to the prior Page 8 of 11 claims of the judgment debtor’s preferential and secured creditors) of being paid the judgment sum if the appeal is subsequently dismissed; and

(iii) the appellate court need not hear a 2nd Stay Application.” (own emphasis added) [25] It is worth noting that the 3rd reason for granting a conditional stay in China Harbour (supra) is that it could potentially prevent a “second stay” application at the appellate court. However, it might instead lead to an appeal against the conditional stay order, as seen in the instant case. Therefore, in so far as this factor is concerned, it may not ultimately save judicial time. [26] Balancing these competing interests, I am satisfied that the most appropriate course in the present case is to grant a conditional stay requiring the judgment sum to be secured. My reasons are as follows: i) The conditional stay is an appropriate middle ground that preserves both parties’ interests pending appeal. ii) Only the principal judgment sum is required to be deposited. iii) Requiring that the deposit of the principal judgment sum with stakeholder solicitors will: a) prevent dissipation of assets and maintain the status quo; b) protect the Plaintiff’s interests by ensuring funds are available if the Appeals fail; c) protect the Defendants’ interests by ensuring their funds are secure, eliminating any concern about whether the Plaintiff can refund the money if the Defendants succeed in the Appeals; d) avoid potential winding up proceedings or execution proceedings; e) provide certainty to all parties during the Appeal period. Page 9 of 11 [27] In deciding to grant a conditional stay, I have considered that the Courts have recognised that consequences which could fundamentally alter the status quo before an appeal is heard may constitute special circumstances (Ming Ann (supra)). [28] I have also considered that the stay conditions should strike a fair balance between protecting the successful party’s interests while preserving the unsuccessful party’s right of appeal. E] CONCLUSION [29] For the reasons stated above, I allowed the Applications for stay of execution of the Summary Judgment pending disposal of the Appeals subject to the condition that the Defendants jointly or severally deposit the principal judgment sum of RM31,776,003.47 with the 1st Defendant’s solicitors as stakeholders within 14 days. As for costs, given the mixed outcome with stay granted but subject to conditions, I made no order as to costs. Dated this 16th day of January, 2025 -SGD- (WAN MUHAMMAD AMIN BIN WAN YAHYA) Judge High Court of Malaya, Kuala Lumpur (Commercial Division (NCC 3)) Page 10 of 11 COUNSEL FOR THE PLAINTIFF Teoh Chye Yi (Cheong Tick Soon together with her) Messrs Raja, Darryl & Loh Tingkat 26, Menara Hong Leong, No. 6, Jalan Damanlela, Bukit Damansara, 50490 Kuala Lumpur Tel: 03-26329999 Emel: rdl@rdl.com.my COUNSEL FOR THE 1ST DEFENDANT Mohammad Danial bin Hazizan (Amber Tan Wey (pupil-in-chambers) together with him) Messrs S Ravenesan No. 54-1, Jalan Telawi, Bangsar Baru, 59100 Kuala Lumpur Tel: 03-22800120 Emel: generalkl@srv.com.my COUNSEL FOR THE 2ND DEFENDANT Kriishand a/l Gopala Krishnan (Muhammad Thaqif Rusyaidi together with him) Messrs Kriishand G Krishnan 40-1, Jalan Telawi, Bangsar Baru, 59100 Kuala Lumpur Tel: 03-22013350 Emel: office@kgklaw.com.my Page 11 of 11 COUNSEL FOR THE 3RD DEFENDANT Jasneeta Kaur Bhullar Messrs Azmi Fadzly Maha & Sim A4-2-5, Solaris Dutamas, No. 1, Jalan Dutamas 1, 50480 Kuala Lumpur Tel: 03-62064220 Emel: general@afa-law.com LEGISLATION / RULES CITED Courts of Judicature Act 1964 ▪ Section 73 Rules of Court 2012 ▪ Order 45 Rule 11 ▪ Order 92 Rule 4 CASES CITED

Capitol Avenue Development Sdn Bhd v. Gamwon Properties Sdn

China Harbour Engineering Company Ltd v. Lunar Shipping Agencies

Kosma Palm Oil Mill Sdn Bhd & Ors v. Koperasi Serbausaha Makmur

Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd [2002] 3

Serangoon Garden Estate Ltd v. Ang Keng [1953] 1 MLJ 116

Salim Bin Ismail & Ors v. Lebbey Sdn Bhd (NO 1) [1997] 2 MLJ 1