Sinohydro Corporation (M) Sdn Bhd v Kaj Development Sdn Bhd (WA-24C-250-12/2020)

This judgment deals with the Defendant’s ex-parte application for Leave to Commence Committal Proceedings (encl. 68) pursuant to O. 52, r. 3(2) of the Rules of Court 2012 (‘RC 2012’) against the Plaintiff and its Directors, namely Ye Haolian (‘1st Contemnor’), He Yuxin (‘2nd Contemnor’) and Zhou Jiayi (‘3rd Contemnor’) (hereinafter collectively referred to as the ‘Proposed Contemnors’) for breaching 2 and intentionally refusing to comply with the terms of the Order of this Court dated 3.1.2023 (encl. 55; ‘Stay Order’) or for causing, willfully permitting or contributing to the Plaintiff’s breach of the Stay Order.

Attempts at settlement of the matter failed and the hearing of encl. proceeded on 4.10.2023, mainly on the issue as to whether the Defendant has established a prima facie case of contempt by the Proposed Contemnors.

After due deliberation of the cause papers and submissions by the parties, the Defendant’s application was dismissed. The full grounds for the decision are elaborated below.

The cause papers are as follows:

the Defendant’s Notice of Application dated 16.5.2023 (encl. 68);

the Defendant’s Statement In Support of Application dated 15.5.2023 (‘Statement’, encl. 69); and

the Defendant’s Affidavit In Support (‘AIS’) affirmed by it Director, Siow Yoke Foong on 15.5.2023 (encls. 70 and 71). Salient Background Facts [5] The background facts of this case can be found in the judgment of this

KAJ Development Sdn Bhd v Sinohydro Corporation (M) Sdn Bhd [2022] MLJU 1413; [2022] 1 LNS 1454 pertaining to the Defendant’s applications under ss 15 and 16 of the Construction Industry Payment and Adjudication Act 2012 [Act 746] (‘CIPAA’) and the Plaintiff’s application under s 28 CIPAA (‘Setting Aside,

Sinohydro Corp (M) Sdn Bhd v KAJ Development Sdn Bhd and another case [2023] 10 MLJ 755 involving the Defendant’s application for stay of the Order which was made pursuant to s 28 CIPAA and the Defendant’s appeal against the decision of the Deputy Registrar in dismissing its application to set aside the Ex-Parte Order allowing a Writ of Seizure and Sale to be issued and a Prohibitory Order against the Defendant (‘Stay of Execution Application & Appeal’). [6] As such, the background facts will not be set out in extenso. Suffice for purposes of encl. 68 to state the salient facts as follows. [7] On 18.6.2019, the Plaintiff served a Payment Claim on the Defendant pursuant to s 5 CIPAA for the total sum of RM230,911,904.03 being monies allegedly due and owing in respect of works carried out by the Plaintiff under the “Design And Build Contract For The Reclamation And Related Works For (Part Of) 609 Acres Of Land At The Melaka Gateway Project, Melaka, Malaysia” (‘Project’). [8] At the end of the adjudication proceedings, the learned Adjudicator delivered his decision on 21.10.2020 (‘AD’) where he determined, among others, that the Defendant shall pay the Plaintiff the sum of RM205,805,673.05, the adjudicated sum shall be paid on or before 11.11.2020 in one lump sum and the Defendant’s claims as per its Payment Response and Adjudication Response were dismissed. [9] On 3.11.2020 and 12.11.2020, the Defendant filed its applications to set aside the AD pursuant to s 15 CIPAA and to stay the AD pending the outcome of the setting aside application under s 16 CIPAA. [10] On 29.12.2020, the Plaintiff applied to enforce the AD pursuant to s 28 CIPAA. [11] On 16.4.2021, this Court dismissed the Defendant’s applications under ss 15 and 16 CIPAA and allowed part of the AD to be enforced under sub-s 28(2) CIPAA i.e. in the sum of RM202,180,729.25 (‘Enforcement Order’). The Defendant appealed against the decision. At the time of filing of encl. 68, the appeal was scheduled for hearing on 31.7.2023. [12] On 31.7.2023, the Court of Appeal dismissed the Defendant’s appeals against the decision of this Court in the Setting Aside, Stay and Enforcement Applications. [13] In 2019 and 2020, the Plaintiff and the Defendant commenced arbitration proceedings against each other in Singapore where evidentiary hearing would have begun in October 2023. [14] Meanwhile, on 24.2.2022, the Plaintiff petitioned to wind up the Defendant as the Defendant had not paid the adjudicated sum. The Defendant’s application to strike out the petition was allowed by the High Court on 27.6.2022. The Plaintiff did not appeal against this decision. [15] On 7.11.2022, the Plaintiff filed an ex-parte application for a Writ of Seizure and Sale and Prohibitory Order on 13 plots of land (‘Subject Lands’). On 11.11.2022, the Deputy Registrar allowed the Plaintiff’s application and granted the Writ of Seizure and Sale (‘WSS’) and Prohibitory Order (‘PO’). [16] The sealed PO was extracted on 21.11.2022 and presented for registration at the Pejabat Pengarah Tanah & Galian Melaka (‘Registry’). Thus, the Subject Lands are deemed seized pursuant to O. 47, r. 6(e) RC 2012. [17] The Plaintiff served the sealed PO at the Defendant’s registered address on 30.11.2022. [18] On 7.12.2022, the Defendant applied to stay the execution of the Enforcement Order pending the disposal of its appeal against the Enforcement Order (‘Stay of Execution Application’). On 8.12.2022, this Court granted an ad interim stay of the Enforcement Order. On 3.1.2023, this Court allowed the Stay of Execution Application and granted the Stay Order. [19] The Defendant had also filed an application on 6.12.2022 to set aside the PO (‘Setting Aside PO Application’). On 20.1.2023, the Deputy Registrar dismissed the Setting Aside PO Application. The Defendant appealed against this decision. On 10.3.2023, this Court allowed the appeal and the ex-parte Order dated 11.11.2022 containing the PO was set aside (‘Setting Aside PO Order’). [20] On 13.3.2023, the Plaintiff appealed to the Court of Appeal against the Setting Aside PO Order and applied to the High Court for a stay of execution of the Setting Aside PO Order pending the disposal of its appeal. On 29.3.2023, this Court dismissed the Plaintiff’s application. [21] On the same day (29.3.2023), the Defendant wrote to the Registry to have the PO registered on the Subject Lands struck out. The Plaintiff wrote to the Defendant to object to the same. [22] On 30.3.2023, the Plaintiff applied to the Court of Appeal pursuant to s 44 of the Courts of Judicature Act 1964 [Act 91] for interim orders pending the disposal of its appeal against the Setting Aside PO Order. [23] On 31.3.2023, the PO registered on the Subject Lands was struck out by the Registry. [24] On 18.4.2023, the Court of Appeal granted the interim order whereby the Defendant by itself, its agents or servants be restrained, and an injunction was granted restraining the Defendant from selling, disposing or in any way dealing with the Subject Lands pending the disposal of the Plaintiff’s appeal against the Setting Aside PO Order. [25] On 2.5.2023, the Court of Appeal allowed the Plaintiff’s appeal against the decision of this Court on 10.3.2023 which set aside the PO. The Court of Appeal further ordered that the PO be reinstated and that the Registrar of Titles be directed to forthwith restore or reinstate the registration of the PO to the register documents of title of the Subject Lands (see Sinohydro Corp (M) Sdn Bhd v KAJ Development Sdn Bhd [2023] 5 MLJ 266). [26] On the same day (2.5.2023), the Plaintiff filed an ex-parte application for an order to extend the PO for six months from 11.5.2023 to 10.11.2023. This application was allowed on 5.5.2023. The Plaintiff’s solicitors duly presented the Extended PO for registration at the Registry. [27] The Defendant applied to the Federal Court for leave to appeal against the decision of the Court of Appeal on 2.5.2023 and for interim preservation orders. Both applications were dismissed by the Federal Court on 12.7.2023. The Grounds for Committal [28] In paras 42 - 45 of the Statement, it is stated that, following the granting of the Stay Order, the Plaintiff can no longer act on the Enforcement Order, which was the basis on which the Plaintiff obtained the ex-parte Order dated 11.11.2022, containing the PO. Notwithstanding having obtained the Extended PO, the Plaintiff’s act of presenting the Extended PO for registration at the Registry had breached the terms of the Stay Order. [29] It was further averred that the Plaintiff’s intention in presenting the Extended PO for registration is to have the same registered against the Subject Lands, despite the Stay Order being in force. By doing so, the Plaintiff had acted in defiance of the Stay Order and intentionally refused to abide by the terms of the Stay Order, thereby interfering with, or obstructing, the due administration of justice. [30] The same grounds are found in paras 47 - 50 of the AIS. The Legal Principles [31] According to O. 52, r. 3 RC 2012, there are two stages to an application for an order of committal. Firstly, the applicant must obtain leave of court to issue committal proceedings against the proposed contemnor. Secondly, the application is made ex-parte, supported by a statement setting out the details as prescribed under O. 52, r. 3(2) RC 2012 and the grounds on which the committal is sought and an affidavit verifying the facts relied on. [32] In this case, no challenge was raised with regards to compliance with the procedural requirements as provided under O. 52, r. 3 RC 2012. [33] Moving on to the test as to whether leave to commence committal proceedings against the Proposed Contemnors should be allowed, it is settled law that the burden lies on the Defendant to show a prima facie case of contempt (see Dato’ Oon Ah Baa & Ors v Eagle & Pagoda Brand Teck Aun Medical Factory & Ors [2003] 7 CLJ 81 at p 93). The court should not venture into deliberating on the merits of the application and a prima facie case of contempt of court is satisfied if the statement and verifying affidavit shows that the respondent has breached a court order (see Tan Kang Ho v Mao Sheng Marketing (M) Sdn Bhd & Ors [2015] 4 CLJ 113 at pp 125 - 126 and Dewan Perniagaan Melayu Malaysia Negeri Johor v Menteri Besar Johor & Ors [2016] 7 MLJ 1 at p 17). [34] Furthermore, in Dato’ Oon Ah Baa, the defendants’ lead counsel was given permission to address the court on the ex-parte application as the court had referred to the observation by Megarry J in London City Agency Ltd v. Lee [1970] 1 Ch 597 and was of the view that, although the plaintiffs’ application for leave was made ex-parte, there was nothing irregular for the defendants’ counsel to be present in court where the defendants became aware of the application and if necessary, to assist the court if called upon even in an ex-parte application (supra, at p 91). [35] In the present application, the parties agreed that the hearing of encl. 68 proceeds on an opposed ex-parte basis where the Plaintiff was allowed to file its Written Submission (encl. 81), which largely contains arguments on points of law as to the interpretation of the Stay Order. [36] In addition, it is settled law that directors of a company can be held liable for the contempt of the company (see Datuk Hong Kim Sui v Tiu Shi Kian & Anor [1987] 1 MLJ 345 at p 347). The Issue: Whether the Defendant has established a prima facie case of contempt by the Proposed Contemnors [37] The Stay Order reads, among others, as follows: “… Pelaksanaan Perintah Mahkamah Tinggi bertarikh 16 April 2022 (‘Perintah Mahkamah Tinggi’) yang membenarkan Saman Pemula bertarikh 29 Disember 2022 Plaintif/Permohon dalam Lampiran 1 digantungkan sehingga pelupusan rayuan Defendan/Responden kepada Mahkamah Rayuan; …” [38] Mr. Sean Tan submitted for the Defendant that the Proposed Contemnors had blatantly disregarded the Stay Order by registering the Extended PO at the Registry despite there being no express term in the Stay Order to allow the presentation and registration of such Extended PO. [39] On the other hand, the Plaintiff contended that the spirit of the Stay Order is merely as an interlocutory order to preserve and prevent the Defendant’s properties from being sold in execution pending the disposal of the Defendant’s appeal to the Court of Appeal in respect of the Enforcement Application. This is signified by this Court when it clarified that the Plaintiff may apply to extend or renew the PO, and by the Court of Appeal in granting the Interim Order dated 18.4.2023 restraining the Defendant from selling, disposing and/ or in any way dealing with the Subject Lands or any part thereof pending the disposal of the Defendant’s appeal against the setting aside of the PO. [40] It is clear from the terms of the Stay Order that it does not contain any express order –

requiring the Plaintiff to remove the PO;

barring the Plaintiff from applying to extend or renew the PO; or

barring the Plaintiff from presenting any order extending or renewing the PO at the Registry for registration to give effect to such order. [41] Moreover, in the Notes of Proceedings on 6.1.2023, the Plaintiff’s counsel sought clarification as to whether the Plaintiff is barred from applying for a renewal of the PO and the Court said that, “As the stay is meant to preserve the status quo, and a PO had already been granted before encl. 32 was filed, for purposes of clarification only, and not to include as a term in the order itself, the Plaintiff may apply to extend the PO before it expires.”. [42] This means that the Plaintiff may present an order extending the PO, if so obtained, at the Registry for registration to give effect to such an order pursuant to O. 47, r. 6(g) RC 2012 which provides that: “…provided that an order made under this rule shall not have any force or effect unless it is presented for registration at the Land Office or Registry of Titles before the expiration of the prohibitory order which such order purports to extend.”. In granting the extension of the PO on 5.5.2023, the court does not act in vain (see Ahmad Saidi bin Md Isa v Timbalan Menteri Hal Ehwal & Ors [2006] 3 MLJ 208 at p 211). [43] In ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd [2023] MLJU 1258, the defendant had argued that by filing the application to extend the Amended PO, it was merely maintaining the status quo and the act cannot be equated as conduct amounting to enforcing the adjudication decision as would be the case if the defendant had proceeded with the next steps to sell the land in question pursuant to the WSS. This Court found that there was merit in this argument. Moreover, if the court is to punish anyone for not carrying out an order, the order must in unambiguous terms direct what is to be done or not to be done. In ASM Development, no express order was made by the Court of Appeal requiring the defendant to remove the Amended PO and, unlike the instant case, the plaintiff did not seek clarification from the panel of learned judges on this matter. [44] Undoubtedly, the Stay Order did not order the removal of the PO. As the Court which had made the Stay Order, I can safely say that it was with the objective of maintaining the status quo; to preserve and prevent the Defendant’s assets from being sold in execution pending the disposal of the Defendant’s appeal to the Court of Appeal against the Enforcement Order. It was not with the intention to remove the PO. [45] In the judgment of this Court in respect of the Stay of Execution Application & Appeal (see Sinohydro Corporation (supra) as mentioned in subpara 5(b) above), this Court held that, notwithstanding the Stay Order, the substratum of the PO is very much alive. [46] As for the Defendant’s submission that this Court merely clarified that the Stay Order does not prohibit the Plaintiff from extending or renewing the PO and in the absence of express terms, the Plaintiff’s act of insisting the Registry to invoke their powers to register the Extended PO without informing the Court and the Defendant or to seek for this Court’s leave before taking such action, is contrary to law and a clear attempt to interfere with the due administration of justice, the simple answer is that in the Statement, the ground upon which the Defendant is relying on in claiming a case for committal is that “... Sinohydro’s act of presenting the Extended Prohibitory Order for registration at the Melaka Land Registry had breached the terms of the Stay Order.”. [47] In Tan Sri Dato’ (Dr) Rozali Ismail & Ors v Lim Pang Cheong @ George Lim & Ors [2012] 3 MLJ 458 at pp 470 - 471, the Federal Court held that the alleged act of contempt must be adequately described and particularized in detail in the statement itself and the accompanying affidavit is only to verify the facts relied in that statement (see too, Tan Sri G Darshan Singh v Tetuan Azam Lim & Pang [2013] 5 MLJ 541). [48] Therefore, the Defendant is bound by the mandatory Statement and the charge must be spelt out within the four walls of the Statement. The Defendant cannot now deviate from its original stance and be heard to complain about the alleged act by the Plaintiff in insisting the Registry to invoke their powers to register the Extended PO as an attempt to interfere with the due administration of justice. [49] Finally, it must be emphasised that on the date of the hearing of encl. 68, the Court of Appeal had already dismissed the Defendant’s appeal and the decision of this Court in allowing the Enforcement Application was affirmed. The courts do not deliberate on issues that have become academic. In my view, allowing the Defendant’s application in encl. in the circumstances of this case would be an “unwarranted stretch of judicial authority” or tantamount to allowing the process of the court to be abused (see Dato’ Oon Ah Baa (supra, at p 95), Tan Sri G Darshan Singh (supra, at pp 549 – 550 and Uthayakumar a/l Ponnusamy v Abdul Wahab bin Abdul Kassim & Ors [2018] MLJU 1263). Conclusion [50] Based on the foregoing reasons, the Defendant has not established a prima facie case of contempt by the Proposed Contemnors in that there was a breach of the Stay Order. Accordingly, the Defendant’s application was dismissed with costs of RM10,000.00 as prayed by the Plaintiff. Dated: 6 November 2023 (ALIZA SULAIMAN) Judge Construction Court 2 High Court Kuala Lumpur Counsels/ Solicitors: For the Plaintiff: Chan Sock Mun (Tan Chee Ying with her) Messrs. Tan Chuan Yong & S.M. Chan Advocates & Solicitors 8the Floor, No. 55-8, The Boulevard Mid Valley City Lingkaran Syed Putra 59200 Kuala Lumpur For the Defendant: Sean Tan Yang Wei (Seaw Ja Hui with him) Messrs. Thomas Philip Advocates & Solicitors No. 5-1, Jalan 22A/70A Wisma CKL, Desa Sri Hartamas 50480 Kuala Lumpur Cases, legislation and other sources referred to in the submissions by learned counsels and in the Grounds of Judgment: Cases: Ahmad Saidi bin Md Isa v Timbalan Menteri Hal Ehwal & Ors [2006] 3 MLJ 208 Arthur Lee Meng Kwang v Faber Merlin (M) Bhd & Ors [1986] 2 MLJ 193 ASM Development (KL) Sdn Bhd v Econpile (M) Sdn Bhd [2023] MLJU 1258 Class One Video Distributors Sdn Bhd & Anor v Chanan Singh A/L Sher Singh & Anor [1997] 5 MLJ 209 Dato’ Oon Ah Baa & Ors v Eagle & Pagoda Brand Teck Aun Medical Factory & Ors [2003] 7 CLJ 81 Datuk Hong Kim Sui v Tiu Shi Kian & Anor [1987] 1 MLJ 345 Dewan Perniagaan Melayu Malaysia Negeri Johor v Menteri Besar Johor & Ors [2016] 7 MLJ 1 KAJ Development Sdn Bhd v Sinohydro Corporation (M) Sdn Bhd [2022] MLJU 1413; [2022] 1 LNS 1454 Lembah Mayang Sdn Bhd & Others v Pengarah Jabatan Perhutanan & Anor [2004] 6 CLJ 465 London City Agency Ltd v. Lee [1970] 1 Ch 597 Madlis Azid & Ors v Chua Yung Kim & Ors [2013] 2 CLJ 110 Muhammad Said Amin v Haszeri Hussin [2014] 3 CLJ 536 Puan Bee Hong & Anor v Pentadbir Tanah Daerah Wilayah Persekutuan & Anor [1994] 2 MLJ 601 Sinohydro Corp (M) Sdn Bhd v KAJ Development Sdn Bhd [2023] 5 MLJ 266 (CA) Sinohydro Corporation (M) Sdn Bhd v KAJ Development Sdn Bhd & Anor Case [2023] MLJU 599; [2023] 10 MLJ 755 Tan Kang Ho v Mao Sheng Marketing (M) Sdn Bhd & Ors [2015] 4 CLJ 113 Tan Sri Dato’ (Dr) Rozali Ismail & Ors v Lim Pang Cheong @ George Lim & Ors [2012] 3 MLJ 458 Tan Sri G Darshan Singh v Tetuan Azam Lim & Pang [2013] 5 MLJ 541 Teknologi Enviro-Kimia (M) Sdn Bhd v Bufflow Engineering Sdn Bhd & Ors [2021] MLJU 3047 Uthayakumar a/l Ponnusamy v Abdul Wahab bin Abdul Kassim & Ors [2018] MLJU 1263 Legislation: Construction Industry Payment and Adjudication Act 2012, ss 5, 15, 16 & 28 Courts of Judicature Act 1964, s 44 National Land Code, s 5 Rules of Court 2012, O. 45 r. 7(6), O. 47 r. 6(e) & O. 52 r. 3(2)