Malayan Banking Berhad v Mines Resort Sdn Bhd (in Liquidation) (BA-38-1513-08/2023)

This appeal is against the decision of the learned Deputy Registrar of 25 March, 2024 whereby it was decided that: • Prosiding bagi Pendengaran bagi Permohonan untuk Pelaksanaan No. BA-38-1513-08/2023 adalah digantung sehingga pelupusan S/N /DvE952pJEiY3sEbmUefqg keseluruhan perbicaraan bagi Guaman Sivil di Mahkamah Tinggi Shah Alam di bawah Guaman Sivil No. BA-22NCC-75-06/2023; dan • Kos Permohonan ini dijadikan kos di dalam kausa. [2] This Court heard this appeal on 26 August, 2024 and allowed the appeal. The Defendant was ordered to pay costs of RM7,500 to the Plaintiff. The Overriding Issue [3] The prevailing issue in this appeal is whether there are special circumstances to allow the Defendant’s Stay Application to stay the Summons for Direction for further auction of the 14 parcels of land charged to the Plaintiff. Background Facts [4] The Bank has obtained an Order for Sale of the Lands dated 3 July, 2020 (“Order for Sale”) vide Originating Summons No. BA 24FC-673- 05/2019 (“OS 673”). The Defendant had challenged the validity of the Charge and opposed OS 673. At the same time, the Defendant also challenged the validity of the Charge vide Originating Summons No. BA- 24FC-1147-10/2019 (“OS 1147”). [5] Both OS 673 and OS 1147 were heard by the Shah Alam High Court. On 3 July, 2020, Choo Kah Sing J (as his Lordship then was) held that the Charge was valid and granted the Order for Sale with costs of RM 20,000.00 and dismissed OS 1147 with costs of RM 10,000.00. S/N /DvE952pJEiY3sEbmUefqg [6] As OS 673 and OS 1147 had been disposed of and the Defendant had not appealed against the decision granting the Order for Sale, what remained was for the auction process to take place. [7] However, the Defendant mounted another attempt to challenge the validity of the Charge vide Shah Alam High Court Suit No: BA-22NCC-75- 06/2023 (“Suit 75”). The Defendant filed an application for an interim injunction to stop the last auction which was fixed for 21 June, 2023. The interim injunction application was dismissed by Mohd Zaki J. [8] After the dismissal of the interim injunction application, the Plaintiff filed this Summons For Directions (“SFD”) for further auction. It was pointed out by the Plaintiff that this SFD is not the first proceeding commenced by it. The Plaintiff had previously, on 30 September, 2020, 13 April, 2022, 10 November, 2022, and 3 May, 2022, applied for and obtained the SFD for auction of the Lands (which were unsuccessful due to no bidder). The Plaintiff highlighted the fact that during these proceedings, the Defendant was represented by solicitors, and no objection was raised by the Defendant at all material times. [9] The Defendant has filed an appeal against the decision of Mohd Zaki J (in Suit 75) is dismissing the interim injunction application. [10] The basis of the present stay application (which was allowed by the learned Deputy Registrar) is premised on the ground that the issue pertaining to the validity of the Charge in Suit 75 is pending appeal before the Court of Appeal (“Appeal 1162”) S/N /DvE952pJEiY3sEbmUefqg The Parties’ Contentions [11] In support of its application for a Stay, it is the Defendant’s position that Suit 75 will be rendered nugatory if the Stay is not granted. [12] The Defendant in its Affidavit-in-Support of its application dated 18 December, 2023 have included grounds for special circumstances which, according to it, accounts for a stay of execution and stay of proceedings to be granted and the grounds were: i. That the Charge Form (16A) is illegal and contravened Section 340(2) of the National Land Code 1965. ii. That it has been found that the charge instrument which is supposed to name the Defendant as the Third-Party Chargor had named the Defendant as the Principal Debtor in the Charge Annexure. By virtue of Clause 3.2 of the Charge Annexure, the Defendant is considered as a principal debtor to the Plaintiff and in Clause 8.4 of the Charge Annexure, the Defendant is responsible to pay the differences in the sum owed to the Plaintiff. iii. The Charge Form 16A shows that the Defendant as a third-party chargor does not bear any responsibilities for the debt owed by Cenmal Commercial Sdn Bhd however, the Charge Annexure states otherwise. iv. This renders the Charge Form 16A to be defective and null and void ab initio because the charge instrument does not S/N /DvE952pJEiY3sEbmUefqg define the position of the Defendant whether as a third-party chargor or a principal debtor. v. The error committed by the Plaintiff contravened with Section 340(2) of the National Land Code 1965 due to the illegality of the charge instrument. The validity of the Charge is now being challenged in court under Suit 75. vi. The Plaintiff had obtained the Order for Sale dated 3 July, 2020 by using the said Charge instrument which is illegal and void ab initio. Therefore, the validity of the Order for Sale granted by this Court is also being challenged due to the illegality of the charge instrument. [13] The Defendant submitted that it “shall be suffering from grave injustice and shall be greatly prejudiced should the Order for Sale dated 3.7.2020 be executed and if the current proceeding in Suit 1513 is not stayed”. [14] The Defendant reiterated the fact that the subject matter in obtaining the Order for Sale is to be traced to the Charge, the validity of which is currently being challenged in Suit 75. Of importance is the following assertation by the Defendant, that is: The High Court has found that there are issues to be tried and that the matter is now pending for Trial at the High Court. If the High Court decides to allow the Defendant’s claim in Suit 75 and the interim injunction allowed in the appeal, then the Charge is no longer S/N /DvE952pJEiY3sEbmUefqg valid and shall thereby render the Order for Sale null and void. This Order for Sale shall as of right be set aside. [15] The Defendant then went on to argue that “the status quo of the Properties is irreversible if the properties are disposed of by way of this auction. The rights of the Defendant as the owner/proprietor of the Properties shall be directly affected by the disposal since the Defendant shall not be able to retrieve back the land at the current market value”. [16] The Defendant also submitted that “since an appeal does not operate as a stay of execution, this application is filed to stay the proceedings and the execution of the Order for Sale”. [17] Last but not least, the Defendant also argued that damages would not be an adequate remedy in the event that it succeeds in its appeal in Suit 75. [18] On the other hand, it is the Plaintiff’s assertion that the allegation that Suit 75 will be rendered nugatory if the Stay is not granted “is misconceived, merely an afterthought and nothing more than a delaying tactic to unnecessarily prolong the present auction of the Lands”. [19] The Plaintiff averred that Suit 75 is clearly an abuse of court process and is inherently devoid of merit. Hence, it cannot constitute special circumstances justifying the stay of proceedings sought by the Defendant. Further, it was contended that a stay of proceedings is irrelevant as “the SFD is merely consequential to the Order for Sale” obtained by the Plaintiff. S/N /DvE952pJEiY3sEbmUefqg The Decision of this Court [20] As noted, the Deputy Registrar had allowed the Defendant’s application to stay the proceedings and the execution of the Order for Sale dated 3 July, 2020 pending the disposal of Suit 75. [21] As conceded by the Defendant, an appeal shall not operate as a stay of execution. This is evidently provided for in Order 55 rule 16 of the Rules of Court 2012. Stay of execution (O. 55, r. 16)

(1) An appeal shall not operate as a stay of execution under the decision appealed against except in so far as the Court appealed from or the High Court may order, and any application for stay shall be made in the first instance to the Court appealed from. (2) The Court appealed from or the High Court may grant an order of stay of execution on such terms as it thinks fit. [22] Be that as it may, this Court has to power to grant an order for a stay, in appropriate cases. [23] It is trite that special circumstances must be shown to justify a stay of execution. Suffice that reference be made to the Court of Appeal case of Ming Ann Holdings Sdn Bhd v Danaharta Urus Sdn Bhd [2002] 3 AMR 2867; [2002] 3 CLJ 380; [2002] 3 MLJ 49; [2002] 1 MLRA 214 where the Court of Appeal held that it is “incumbent upon the defendant in this case to show from the affidavit the special circumstances to enable this court to grant a stay of execution.” S/N /DvE952pJEiY3sEbmUefqg [24] Another principle that it well-established in this area of practice and procedure is that the merits of a party's case in a stay application is not a relevant matter for consideration: 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. [25] This Court has thoroughly considered the grounds advanced by the opposing parties. [26] This Court holds the view that the Defendant has failed to show any special circumstances to warrant a Stay. This is because Suit 75 is irrelevant to the present SFD. [27] This Court agrees with the Plaintiff that Suit 75 is clearly an attempt to revisit the issue of validity of the Charge, which has been previously addressed and disposed of in both OS 673 and OS 1147. By failing to appeal against the decision in granting the Order for Sale, the Order for Sale remains final and binding and this Court will not go behind the Order for Sale. [28] In dismissing the Defendant’s application for an interim injunction in Suit 75, the High Court in paragraphs 13 and 14 of its Grounds of Judgment expressly alluded to the fact that the issue of the validity of the Charge has been disposed of in the previous High Court proceedings (which are OS 673 and OS 1147) and the said decision is final as no appeal was filed by the Defendant. Based on that decision, it is plain that the Defendant’s action in Suit 75 is caught by the doctrine of res judicata. S/N /DvE952pJEiY3sEbmUefqg [29] However, the matter in Suit 75 is further complicated by the fact that, as alluded by the Defendant, the Plaintiff had also filed an application to strike out the Defendant’s suit via Enclosure 15. On 3 March, 2024, the Shah Alam High Court had dismissed Enclosure 15 and found that the issue of whether the Charge is valid or not is an issue to be tried. The Defendant pointed out that the Shah Alam High Court has found that there are merits to the case and Suit 75 “is now fixed for Trial” and “the High Court had fixed on 25 September, 2024 for pre-trial case management”. [30] Regardless of the fact that the main action in Suit 75 and the appeal against the refusal by the High Court to grant an interim injunction in Appeal 1162 are pending before the High Court and Court of Appeal respectively, this Court is of the opinion that the present subject matter in this appeal, which is the SFD for further auction, is consequential to the Order for Sale that the Plaintiff has obtained and that Order for Sale remains legal and binding. [31] More importantly, this Court has also considered the Court of Appeal case of Univein Sdn Bhd v Malaysia Building Society Bhd [2003] 3 AMR 181; [003] 2 CLJ 514; [2003] 4 MLJ 618; [2003] 1 MLRA 163. In that case, the appellant had applied for a stay pending appeal against an order for sale for lands charged to the respondent as security for loans. The appellant had argued that a refusal to grant a stay would render their appeal nugatory or academic, and that the balance of convenience lied in their favour. The court dismissed the appellant’s appeal and held that the balance of convenience tilted in favour of allowing the sale to proceed and that the respondent should not be deprived of the fruit of their litigation; and it was further held that any loss that the appellant might sustain from the sale of their lands could be compensated with damages based on the S/N /DvE952pJEiY3sEbmUefqg commercial value of the lands. As noted by the Court of Appeal in that case, “if the lands were sold now and the appellants should succeed in the appeal, any loss that they might sustain from the sale of their lands could be compensated for by the respondents with damages based on the commercial value of the lands. There was no question that the respondents would not be able to pay the damages”. This applies with equal force to the present case. [32] The purported merit of Suit 75 clearly does not constitute a special circumstance for the purpose of justifying the Defendant’s Stay Application. Suit 75 will also not be rendered nugatory in the event that the Defendant succeeds in Suit 75 as it is undisputed that the Defendant can be adequately compensated by the Plaintiff for the loss and damage it may suffer. [33] This appeal is allowed. Dated: 10 October, 2024 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam S/N /DvE952pJEiY3sEbmUefqg Counsel: Aufa Radzi with Anson Liow for the Plaintiff (Messrs. Skrine) Adrian Silvarajoo with Nur Amalina Mohamad Rosli for the Defendant (Messrs. Ramli Yusuff & Co.)