Spk-Sentosa Corporation Berhad (dalam Penggulungan) v Sep Capital (M) Sdn Bhd (WA-22NCC-407-09/2021)

SEP CAPITAL (M) SDN. BHD (COMP. NO.: 201301011290/

PEMBINAAN SPK SDN. BHD (COMP. NO.: 198401010361/

TRW BOULEVARD SQUARE SDN. BHD (COMP. NO.: 198401010361/ 122900-W) ... DEFENDANTS JUDGMENT [1] When parties enter into a consent judgment declaring rights and entitlements, there is an expectation that it would be complied with, in letter and spirit. Yet, the First and Second Defendants here resist putting ink to paper to uphold a pronouncement that grants the Plaintiff rights over an arbitration award involving a third party. [2] In examining whether to compel the First and Second Defendants' execution of an assignment, the pivotal issue lies in the tension between consent judgments as declaratory compromises versus executable orders. This turns on the nature of declaratory relief, the principles underlying consent judgments, the defences raised regarding unilateral variations, and ultimately, whether executing an additional document is necessitated to give effect to this declaratory bargain. Background facts [3] On 12.5.2017, the Plaintiff, SPK-Sentosa Corporation Berhad and the First Defendant, SEP Capital (M) Sdn Bhd entered into a Share Sale Agreement for the Plaintiff to sell 54,300,000 shares in the Second Defendant, Pembinaan SPK Sdn Bhd and 3,500,000 shares in Semarak Korporat Sdn Bhd to the First Defendant for RM6 million and RM3.5 million respectively. The Share Sale Agreement contained certain conditions precedent and stipulated the payment schedule for the purchase price. Clause 6A of the Share Sale Agreement stated that the Plaintiff shall indemnify the Second Defendant for any costs or claims arising from an ongoing arbitration proceeding between the Second Defendant and the Third Defendant, TRW Boulevard Square Sdn Bhd, and that any proceeds from the arbitration shall accrue to the Plaintiff. [4] At the time, there was an arbitration proceeding between the Second Defendant and Third Defendant concerning a construction contract dispute where the Second Defendant was seeking over RM2.7 million from the Third Defendant. On 16.7.2019, the arbitration tribunal issued a final award requiring the Third Defendant to pay over RM17 million to the Second Defendant (“Arbitration Award”). [5] There was a shortfall of RM1 million for the purchase consideration of the Second Defendant's shares under the Share Sale Agreement which the First Defendant failed to pay. On 30.7.2021, the Plaintiff filed a suit registered under WA-22NCC-339-07/2021 (“Suit 339”) against the First Defendant to recover this RM1 million. On 22.10.2021, the parties recorded a consent judgment in Suit 339 for the First Defendant to pay RM700,000 as full settlement (“Consent Judgment”). [6] Separately, on 10.9.2021, the Plaintiff filed this suit in these proceedings against the First, Second and Third Defendants primarily seeking a declaration that the Plaintiff is entitled to the Arbitration Award proceeds and an order requiring assignment of rights under the Arbitration Award. During case management on 21.10.2021, the Plaintiff withdrew this suit against the Third Defendant. [7] On 22.10.2021, the Plaintiff, the First Defendant and the Second Defendant recorded a consent judgment (“the Consent Judgment”) in this suit declaring that the Plaintiff has rights over the RM16.9 million Arbitration Award sum, with interest and costs. [8] Around 18 months later, the Plaintiff sent a draft deed of assignment dated 18.4.2023 seeking to assign rights over the Arbitration Award proceeds per the Consent Judgment. The First Defendant and Second Defendant refused to execute this draft deed of assignment, communicated by a letter dated 26.4.2023. [9] On 17.01.2022 the Plaintiff issued a statutory notice of demand under Section 466 of the Companies Act 2016 to the Third Defendant. On 24.3.2022, the Plaintiff had filed a winding up petition registered as Petition No. WA-28NCC- 237-03/2022 (“the Petition”) against the Third Defendant to wind up the Third Defendant and demanded payment of over RM20 million. The Petition was dismissed by the High Court on 27.03.2023 on the basis that the Consent Judgment is merely a declaration that declares the Plaintiff's rights over the Arbitration Award sums which does not contain any enforceable order and is not an assignment in writing. [10] On 2.6.2023, the Plaintiff filed an application in Enclosure10 for consequential orders in this suit seeking an order requiring the First and Second Defendants to execute the deed of assignment within 7 days. The First and Second Defendants opposed the application. The Plaintiff’s application [11] In Enclosure 10, the Plaintiff filed an application for consequential orders to give full effect to the Consent Judgment, due to the following (as stated in Enclosure 10): a) The First and Second Defendants' refusal to comply with and give effect to the declaratory Consent Judgment stating that the Plaintiff is entitled to all proceeds of the Arbitration Award. b) The winding up court's refusal in the Petition to give full effect to the declaratory Consent Judgment. [12] The Plaintiff seeks the following consequential orders: a) The First and Second Defendants shall execute a deed of assignment transferring all rights under the Arbitration Award to the Plaintiff within seven days. b) Alternatively, if the First and Second Defendants fail to sign the deed of assignment, the court to direct its officer to execute the deed of assignment on behalf of the First and Second Defendants in favour of the Plaintiff. [13] The grounds are that the First and Second Defendants have refused to comply with the declaratory Consent Judgment by refusing to sign the deed of assignment. The winding up court also held that the Consent Judgment is merely a declaration and not an assignment capable of enforcement. Hence consequential orders are necessary to give effect to the Consent Judgment. The Consent Judgment [14] The terms of the Consent Judgment in their entirety are laid out below: “1. Satu deklarasi bahawa Plaintif mempunyai hak ke atas kesemua jumlah yang telah diawadkan di bawah Awad Timbangtara bertarikh 16.07.2019 di antara Defendan Kedua dan Defendan Ketiga sebanyak RM16,925,094.16 dengan faedah pada kadar 8% setahun ke atas RM16,925,094.16 sehingga penyelesaian penuh Awad Timbangtara tersebut dan kos prosiding Timbangtara tersebut sebanyak RM350, 000.00; dan

Tiada perintah terhadap kos.” [15] Essentially in the Consent Judgment, the Plaintiff, and the First and Second Defendants have agreed that the Plaintiff has rights over the entire sums of RM16.9 million plus interest and costs awarded to the Second Defendant under the arbitration between the Second Defendant and Third Defendant. It is a declaratory consent judgment recorded in the Plaintiff's favour regarding its entitlement to the Arbitration Award sums. The Plaintiff’s submissions [16] In summary the Plaintiff submits: a) The filing of the consequential order application seeking execution of the deed of assignment is necessary and well within the court's inherent jurisdiction to give effect to the Consent Judgment. It does not violate the principle of functus officio. b) A clear injustice would occur if the First and Second Defendants are allowed to go against the Consent Judgment by now claiming entitlement over the arbitration proceeds, after having earlier agreed that the Plaintiff has rights to the proceeds. This would offend fairness and allow the First and Second Defendants to benefit from their own breach. c) The court should not assist the First and Second Defendants' silence and inaction in allowing the Plaintiff to obtain the arbitration proceeds per the clear Consent Judgment. Their silence renders the Consent Judgment futile. d) No absolute prejudice is caused to the First and Second Defendants by the consequential order. e) The deed of assignment is essential to give effect to the Consent Judgment, failing which it is merely a futile paper judgment. This necessitates the consequential order. f) The First and Second Defendants agreed to give the arbitration proceeds to the Plaintiff under the Consent Judgment and Share Sale Agreement Clause 6A. Their present refusal to sign the deed of assignment and reliance on the Third Defendant's non-assignment clause are afterthoughts made in bad faith, showing their disregard for the Consent Judgment. The First Defendant and Second Defendant’s submissions [17] In summary the First and Second Defendants submit: a) The Consent Judgment is a contract between parties with only a declaratory order and no positive executory obligations on the First and Second Defendants. As such, they have no obligation to execute any deed of assignment under the Consent Judgment. b) The court has no jurisdiction to grant the order sought in Enclosure 10 as it is an attempt to unilaterally alter/amend the Consent Judgment without the Third Defendant’s consent. c) The consequential orders sought are illegal, futile and have no legal effect as the non-assignment clause in the Second Defendant's contract requires the Third Defendant's consent for any assignment. d) Any power of attorney created under the deed of assignment would be invalid for non-compliance with the Powers of Attorney Act 1949. e) The real dispute is between the Plaintiff and Third Defendant. The Plaintiff should have continued its action against the Third Defendant instead of withdrawing it earlier. f) Enclosure 10 severely prejudices the First and Second Defendants by varying the Consent Judgment and imposing additional onerous obligations without their agreement. g) The Plaintiff had earlier abandoned its demand for the First and Second Defendants to execute an assignment. It is now estopped from reasserting this demand. h) Overall, the First and Second Defendants have not breached any order. Rather, the Plaintiff's liquidator failed to properly advise on the Consent Judgment's limited effect. Costs should be ordered personally against the liquidator. Analysis and findings of the court Non-executory declaratory orders [18] In this matter, the court finds that the essence of the Consent Judgment, agreed upon by the parties, is declaratory rather than executory. This distinction is pivotal. A declaratory judgment, as elucidated in Lai Kee Peng (Messrs Lai Kee Peng & Assoc) v Tay Hup Liang [2016] 4 CLJ 1 is a formal statement by the court pronouncing upon the legal state of affairs or relationships, without containing any order enforceable against the defendant. This case concerns a dispute over a stakeholder's release of a retention sum to one party despite a pending appeal against the court order relied on. The appellant solicitor was a stakeholder holding RM500,000 deposited by the purchaser under a sale and purchase agreement for the respondent vendor's benefit. The purchaser obtained a court order in default requiring forfeiture of the retention sum. While the respondent's appeal against that order was pending, the appellant released the sum to the purchaser. The order was later set aside. In explaining that a declaratory judgment only pronounces on legal relationships without any enforceable order, the Federal Court held that the High Court order obtained by the purchaser and relied on by the appellant was merely declaratory in nature. As the appellant solicitor was not a party to the court case, that declaration could not be enforced against her. She should not have released the retention sum pending the Respondent's appeal. The Federal Court held: “[30] A declaratory judgment is a formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs. It pronounces upon a legal relationship but does not contain any order which can be enforced against the defendant. This is different from an executory judgment where the courts determine the rights of the parties and then order the defendant to act in a certain way, for example by an order to pay damages. If it is disregarded, it can be enforced by official action, usually be levying execution against the defendant's property or imprisoning him for contempt of court: Lord Woolf and Jeremy Woolf, The Declaratory Judgement, (4th Ed) Sweet & Maxwell.” (emphasis added) [19] This nature of judgment, as expounded in Takako Sakao v Ng Pek Yuen & Anor (No 3) [2010] 2 MLJ 141, signifies that it merely declares rights without directing specific performance, hence lacking the enforceability characteristic of an executory judgment. This case concerns an application to stay the execution of a declaratory judgment pending review. The Federal Court had previously declared the appellant to be the beneficiary of a constructive trust over certain property registered under the second respondent's name. The second respondent then sold the property and pocketed the sale proceeds. The Federal Court made a follow-up judgment directing specific relief against the second respondent. when dismissing the second respondent's stay application, the court observed that the principal declaratory judgment only declared the existence of the constructive trust without making any enforceable order. Unlike an executory judgment, a declaration pronounces rights without directing specific performance from the defendant. It cannot be executed or enforced by committal/imprisonment for contempt or other processes. This case illustrates that a declaratory judgment lacks enforceability precisely because it does not direct the defendant to do or refrain from doing anything specific. It merely declares legal relationships, unlike an executable court order against the defendant. The Federal Court held: “[6] There is an added point in so far as staying the effect of the principal judgment is concerned. All that judgment does, inter alia, is to hold that the appellant is a beneficiary under a constructive trust of which the second respondent is a trustee. In short it declares the existence of a constructive trust. It makes no positive order, The weakness of the remedy of declaration lies in the want of its enforceability. A declaration cannot be enforced by execution. In Prakash Chand v. Grewal [1975] Cri LJ 679, the court held as follows: A declaratory decree cannot be executed as it only declares the rights of the decree-holder qua the judgement-debtor and does not, in terms, direct the judgement-debtor to do or to refrain from doing any particular act or things. Since there is no command issued to the judgement-debtor to obey, the civil process cannot be issued for the compliance of that mandate or command. In other words, there can be no committal or other execution process issued to enforce a declaration. Since a declaration cannot be enforced, no question of staying it may arise.’’ (emphasis added) [20] In reviewing the Consent Judgment, it is apparent that it only contains a single declaratory order, without imposing any positive obligations or executable orders on the first and second defendants. Specifically, there is no stipulation for the execution of a deed of assignment or for the assignment of the Arbitration Award proceeds by the First and Second Defendants. The application of the principle 'Nemo dat quod non habet' is relevant here, as the First and Second Defendants no longer possess any rights over the arbitration proceeds to assign to the Plaintiff. [21] Furthermore, the court notes that during the negotiation process leading to the Consent Judgment, there was no contemplation or agreement regarding the execution of a deed of assignment by the first and second defendants. The Plaintiff's acquiescence to the Consent Judgment, premised on paragraph 25(a) of the Statement of Claim without any order as to costs, reinforces this understanding. It was prayed: “25. Wherefore, the Plaintiff claims against the Defendants the following: - a) a declaration that Plaintiff is entitled to all the sums awarded under the Final Award dated 16.7.2019 between the Second Defendant and the Third Defendant;” [22] The absence of any express obligation in the Consent Judgment regarding the execution of a deed of assignment by the First and Second Defendants is indicative of the parties' intentions at the time of agreement. [23] The court finds that the Plaintiff, having agreed to the terms of the Consent Judgment, cannot now assert an obligation on the part of the First and Second Defendants to sign a deed of assignment. Such a claim contradicts the agreed terms and is barred by the doctrine of estoppel. The subsequent allegation by the Plaintiff, arising significantly later post-judgment, that the First and Second Defendants are obligated to execute a ‘proposed finalised draft Deed of Assignment’, is an attempt to unilaterally amend the terms of the Consent Judgment. This approach is inconsistent with the principles established in Mega Palm Sdn Bhd & Anor v Hun Tee Siang (Menyaman Atas Kapasitinya Sebagai Pemegang Jawatan Di Persatuan Penduduk Country Heights Damansara, Kuala Lumpur) & Ors [2022] 4 CLJ 248, where it was emphasised that a consent judgment is akin to a contract and cannot be varied without mutual consent. The Court of Appeal held: “[31] Thus, a consent order is akin to a contract with the superadded judicial command as emphasised in Tan Geok Lan v. La Kuan [2003] 3 CLJ 244. Once a consent judgment had been perfected, the parties are bound by it and the court is duty-bound to enforce the agreed terms of the same. The court is also not at liberty to vary any of the agreed terms unless with the mutual consent of the parties...” [24] To support the proposition that the court is empowered to grant consequential orders to consent judgments, the Plaintiff referred to the following cases: Stone World Sdn Bhd v Engareh (M) Sdn Bhd [2020] 12 MLJ 237; Lim Ban Kay @ Lim Chiam Boon v Kilang Kelapa Sawit Morib Sdn Bhd & Ors [2022] MLJU 2572; Ho Kam Wah @ Ho Kim Wah v Began Land Sdn Bhd [2018] MLJU 291; Common Ground TTDI Sdn Bhd v Ken TTDI Sdn Bhd [2022] MLJU 962; Chew Hon Keong v Betterproducts Industries Sdn Bhd & Ors [2013] 7 MLJ 196; and Perniagaan Habeeba Majeed & Ors v Fazilah Bt Majhardeen & Anor [2020] MLJU 2335 (paragraph 14 of Enclosure 27) [25] However, these case all concerned executory consequential orders. [26] Stone World Sdn Bhd v Engareh (M) Sdn Bhd concerns the defendant’s attempt to impeach a consequential order granted in an earlier concluded suit over which all appeal avenues were exhausted. The Federal Court held that the High Court retained jurisdiction under the 'liberty to apply' exception to grant the consequential order, which substituted the remedy but did not vary the substantive finding of liability made earlier. While upholding the court's power to grant consequential orders, this case is distinguishable from the Plaintiff's situation as it dealt with enforcing the executory remedy due to blatant non-compliance. [27] Lim Ban Kay @ Lim Chiam Boon v Kilang Kelapa Sawit Morib Sdn Bhd & Ors concerns an application by the executor of a deceased plaintiff's estate to substitute the plaintiff and enforce the Court of Appeal's earlier order for specific performance of agreements. The High Court allowed the substitution to give effect to the Court of Appeal's order. While supporting courts' powers to grant consequential orders, this case dealt with enforcing an executory order for specific performance and is hence distinguishable from the Plaintiff's situation. [28] Ho Kam Wah @ Ho Kim Wah v Began Land Sdn Bhd concerns the plaintiff's application to stay execution of a consent order and consequential order directing specific performance, pending appeals. The High Court dismissed the stay application on grounds of res judicata and issue estoppel as a similar application was earlier dismissed. While affirming courts' powers to grant consequential orders, this case dealt with enforcing an executory order and is distinguishable from the Plaintiff's situation. [29] Common Ground TTDI Sdn Bhd v Ken TTDI Sdn Bhd concerns the defendant landlord's application for consequential orders requiring the plaintiff tenant to vacate the premises and pay double rental after its tenancy expired. The High Court held the defendant was justified in seeking such consequential orders to compel the plaintiff's compliance, since it had refused to vacate despite the dismissal of its claim for a renewed tenancy. While affirming the court's power to grant consequential relief, this case dealt with enforcing the executory remedy against a non-compliant plaintiff. [30] Chew Hon Keong v Betterproducts Industries Sdn Bhd & Ors concerns the petitioner's application for appointment of an independent accountant to value shares per a consent order, which was resisted by the respondents who applied instead to rescind the consent order terms and wind up the company. The High Court allowed the petitioner's application to unlock the deadlock and give effect to the consent order, holding the court retains power to facilitate implementation of consent judgments under the 'liberty to apply' rule. While supporting courts' consequential powers, this case dealt with enforcing executory obligations rather than just declaratory relief. [31] Perniagaan Habeeba Majeed & Ors v Fazilah Bt Majhardeen & Anor concerns the plaintiffs seeking consequential orders to enforce a consent judgment requiring the defendants to transfer a foreign worker to the plaintiffs' company. The High Court allowed the application to give effect to the consent judgment, holding it has inherent powers to compel performance of consent judgment terms. While supporting courts' consequential powers, this case dealt with enforcing executory obligations rather than just declaratory relief. [32] The court also observes that the Plaintiff only asserted that the First and Second Defendants must execute a 'proposed finalised draft Deed of Assignment' after one and a half years after the Consent Judgment was recorded on 22.10.2021. The proposed deed of assignment was only sent to the First and Second Defendants around 18.4.2023. This was around 1.5 years after the Consent Judgment was recorded. [33] In the interim period between recording the Consent Judgment and demanding the deed of assignment, the Plaintiff had filed the Petition against the Third Defendant relying on the Consent Judgment. The Petition filed by the Plaintiff indicates that the real dispute herein is between the Plaintiff and the Third Defendant. The Plaintiff used the Consent Judgment to support its position as a debtor entitled to proceeds under the Arbitration Award in order to wind up the Third Defendant. However, the Petition was dismissed. It was only following the dismissal of the Petition that the Plaintiff then asserted that the First and Second Defendants must execute a deed of assignment to assign rights under the Arbitration Award. [34] Therefore, this sequence of events demonstrates that the real purpose of entering into the Consent Judgment was in relation to the Plaintiff's dispute with the Third Defendant regarding the Arbitration Award sums. It did not envisage requiring the First and Second Defendants' involvement through any deed of assignment or stipulation to that effect. The demand for execution of the deed of assignment appears as an afterthought following the failure of the Petition against the Third Defendant. [35] In conclusion, the court rules that the Consent Judgment, being declaratory in nature, does not impose any enforceable obligations on the first and second defendants to execute a deed of assignment. The Plaintiff's application, which seeks to enforce such obligations, is dismissed on this ground. The court must respect and uphold the terms of the Consent Judgment as mutually agreed upon by the parties, and any attempt to alter or impose new obligations unilaterally is not within the jurisdiction of this Court. Unilateral variation [36] The Plaintiff submits that the deed of assignment is crucial to formalise the assignment of rights under the Consent Judgment, enabling the enforcement of the Arbitration Award. The Plaintiff contends that the deed of assignment's role is to summarise events and formalise the assignment of rights, ensuring clarity in future enforcement. The Plaintiff argues that without the deed of assignment, the Consent Judgment becomes ineffective, rendering the Arbitration Award unenforceable. [37] Further, the Plaintiff submits that despite the clear stipulations in the Consent Judgment, the First and Second Defendants refused to sign the deed of assignment, an act the Plaintiff views as contradictory and disrespectful towards the judgment. The Plaintiff contends that this refusal creates a gap in addressing the proceeds from the Arbitration, thereby prejudicing the Plaintiff's rights. The Plaintiff argues that this refusal indicates bad faith on the part of the First and Second Defendants, constituting an abuse of court process. Hence, the Plaintiff maintains that it is necessary and just for the First and Second Defendants to sign and stamp the proposed deed of assignment to give full effect to the Consent Judgment. [38] The First and Second Defendants submit that Enclosure 10 represents an unauthorised alteration of the Consent Judgment, effectively imposing new, onerous obligations on them without their consent. It is maintained by the First and Second Defendants that the Consent Judgment, as a conclusive document regarding the rights of the parties concerning the proceeds from the arbitral award, does not necessitate an additional document like the proposed deed of assignment. The First and Second Defendants contend that this deed of assignment, which they are being compelled to sign, contains clauses that unilaterally impose additional responsibilities, such as transferring the Arbitration Award to the Plaintiff's name and assisting in the recovery of arbitration sums. [39] Furthermore, the First and Second Defendants argue that Enclosure 10 unilaterally varies the Consent Judgment by introducing obligations not originally agreed upon. They assert that the terms of the proposed deed of assignment were drafted solely by the Plaintiff, without consultation, and include clauses that significantly increase their liabilities. The First and Second Defendants contend that this approach undermines their rights to freedom of contract and alters the original agreement, which did not envisage such obligations. Therefore, they maintain that Enclosure 10, if permitted, would unjustly impose additional burdens on them that are not supported by the original terms of the Consent Judgment. [40] Upon careful examination of the arguments and documentary evidence, this Court finds the submissions of the First and Second Defendants to be more compelling for several reasons. [41] The Consent Judgment, as recorded on 22.10.2021, constitutes a legally binding agreement reflecting the mutual consent and understanding of the parties at that time. Any subsequent alterations or additions to this judgment, including those proposed in the deed of assignment, represent a unilateral attempt by the Plaintiff to vary the terms of this agreement. Such variations, particularly in the absence of mutual consent, undermine the fundamental principle of contract law that binds parties to their original terms of agreement. [42] The proposed deed of assignment contains clauses that impose new and onerous obligations on the First and Second Defendants. For instance, Clause 2(b) of the Deed states that “the Second Defendant is now liable to procure the Award to be transferred to the name of the Plaintiff,” and Clause 2(c) requires the Second Defendant “to facilitate and assist in the documentation for the Plaintiff to recover the sums of the Arbitration Proceedings.” These clauses introduce responsibilities that extend well beyond the scope of the original Consent Judgment, thereby unilaterally altering the nature of the First and Second Defendants' obligations. [43] Moreover, Clause 4 of the proposed deed of assignment, creating a power of attorney in favour of the Plaintiff, further extends these new obligations, allowing the Plaintiff to use the Second Defendant’s name to recover proceeds from the Arbitration Award. These provisions are not merely formalisations of the assignment of rights as envisaged in the Consent Judgment but constitute new, onerous obligations imposed unilaterally by the Plaintiff. [44] The original Consent Judgment and the Share Sale Agreement do not stipulate or imply the necessity of a subsequent deed of assignment. The introduction of this document, therefore, represents a significant deviation from the agreed terms. The Plaintiff's assertion that the deed of assignment is merely a formalisation of the assignment of rights does not find support in the original documents. Rather, it appears to be an attempt to introduce new terms and conditions which were neither contemplated nor agreed upon. [45] The court notes the principle established in the case of Mega Palm Sdn Bhd & Anor v Hun Tee Siang (Menyaman Atas Kapasitinya Sebagai Pemegang Jawatan Di Persatuan Penduduk Country Heights Damansara, Kuala Lumpur) & Ors [2022] 4 CLJ 248 (Court of Appeal), which underscores that a consent judgment cannot be varied without mutual consent of the parties. This case concerns the plaintiffs filing a fresh action to enforce and seek additional reliefs under a consent judgment recorded in an earlier suit, which the defendants contended ought to have been pursued in the original suit itself. [46] The Court of Appeal dismissed the defendants' contention, holding that while most consent judgment terms mirrored the original prayers, there were some terms that went beyond the scope of the initial suit. Hence, a fresh action was required to enforce those additional consent judgment terms under the principle in In Re Hearn [1913] 108 LT 452. Nonetheless, the court underscored that a consent judgment cannot be unilaterally varied without mutual consent. The court, Per S Nantha Balan JCA, stated: “In so far as any variation of a consent order is concerned, it is also trite that the only possible way in which a consent order could be altered/varied would be by the consent of all the parties. See: the Federal Court’s decision in Ganapathy Chettiar v. Lum Kum Chum & Ors; Meenachi v. Lum Kum Chum [1981] 1 LNS 59; [1981] 2 MLJ 145 (FC) (at p. 146).” [47] This statement arose in the context of the court examining the broader principles governing consent judgments. The court was considering the defendants' argument that the plaintiffs' fresh action to enforce the consent judgment effectively varied its terms without mutual agreement. While the court ultimately allowed the fresh action, it reiterated the established position that any actual variation of consent judgment terms requires consent of all parties. [48] Coming back to the instant case, the unilateral attempt by the Plaintiff to impose these new terms through the deed of assignment, without the Third Defendant’s consent, is a clear deviation from this principle. It undermines the sanctity of the original agreement and the contractual freedom of the parties. [49] In light of these considerations, the court concludes that the Plaintiff's application to compel the First and Second Defendants to sign the deed of assignment represents an impermissible unilateral variation of the Consent Judgment. This variation, without the First and Second Defendants’ consent, contravenes the foundational legal principles governing consent judgments and contractual agreements. [50] Therefore, the court finds no merit in the Plaintiff's application. The application is dismissed, upholding the First and Second Defendants' right to adhere to the terms as originally agreed upon in the Consent Judgment. The sanctity of the original agreement, as embodied in the Consent Judgment, shall remain inviolate and respected. [51] The court lacks jurisdiction to vary the Consent Judgment without the First and Second Defendants' consent. The Consent Judgment did not require an additional document for the assignment of rights. The “proposed Finalised Deed of Assignment” adds obligations not in the original Consent Judgment, such as asssigning the award proceeds to the Plaintiff and aiding in documentation, which cannot be imposed on the First and Second Defendants without their consent. Prohibition against assignment [52] The First and Second Defendants submit that the Arbitration Award dated 16.07.2019, favouring the Second Defendant, cannot be assigned without the consent of the Third Defendant, as stipulated in Clause 1.7 of the Conditions of Contract between the Second and Third Defendants. It is maintained by the First and Second Defendants that the Learned High Court Judge held that the non-assignment clause in the agreement requires the consent of the other party before any debt assignment. The First and Second Defendants contend that any assignment of the arbitral award's proceeds is invalid without the Third Defendant's consent, which the Plaintiff has not obtained. Furthermore, the First and Second Defendants argue that the Plaintiff has abandoned their right to demand that the First and Second Defendants sign any deed of assignment. This contention is based on the Plaintiff's agreement to record the Consent Judgment solely on paragraph 25(a) of the Statement of Claim with no order as to costs, and their failure to consult the First and Second Defendants regarding the preparation of the deed of assignment. [53] It is maintained by the Plaintiff that the First and Second Defendants have conceded the validity of the Consent Judgment, as evidenced by their solicitors' letter dated 26.04.2023, which acknowledges the Plaintiff's entitlement to the entire proceeds of the arbitration. The Plaintiff contends that based on this admission, the First and Second Defendants are now estopped from asserting a contradictory position and are bound to comply with Clause 6A of the Share Sale Agreement which states: “The Vendor shall indemnify PSPK the cost, expenses and any claims arising from the arbitration between PSPK and TRW (more specifically set out in the Third Schedule) and any proceeds arising from this arbitration shall accrue to the Vendor” [54] Further, the Plaintiff argues that the First and Second Defendants, having acted in accordance with the terms of the Share Sale Agreement and benefited from it, are now obligated to ensure that the proceeds of the Arbitration Awards are given to the Plaintiff. This obligation, as per the Plaintiff, is clearly outlined in Clause 6A of the Share Sale Agreement. [55] After a detailed examination of the submissions and evidence provided by both parties, the court finds in favour of the First and Second Defendants. [56] The central issue revolves around the enforceability of the deed of assignment in the context of the Consent Judgment. The First and Second Defendants' primary contention is grounded in the non-assignment clause present in the Conditions of Contract between the Second Defendant and the Third Defendant. Specifically, Clause 1.7 of the Conditions of Contract stipulates that neither party shall assign any part of the Contract or any benefit or interest therein without the prior agreement of the other Party. It reads: “1.7 Assignment Neither Party shall assign the whole or any part of the Contract or any benefit or interest in or under the Contract. However, either Party:

may assign the whole or any part with the prior agreement of the other Party, at the sole discretion of such other Party, and

may, as security in favour of a bank or financial institution, assign its right to any moneys due or to become due, under the Contract.” [57] This clause is critical in determining the validity of any purported assignment arising from the Consent Judgment. The Learned High Court in deliberating the Petition, applied the precedent set in Merita Merchant Bank Singapore Ltd v Dewan Bahasa dan Pustaka [2014] 9 CLJ 1064, reinforcing the significance of the non-assignment clause. The winding-up court’s ruling that the consent of the other party is a prerequisite for any valid assignment underlines the necessity of the Third Defendant's consent in this matter. [58] The Merita Merchant Bank case concerned an appeal against the judgment of the Court of Appeal, which allowed the second defendant's appeal against the decision of the High Court with costs. The plaintiff, Merita Merchant Bank Singapore Ltd, sued the second defendant, Dewan Bahasa Dan Pustaka, as an assignee of certain debts due and payable by the second defendant to the first defendant, Benatulin Timur Sdn Bhd, who had supplied printing papers to the second defendant. The main question was whether the consent of the debtor is a legal requirement for the assignment to be valid in law under Section 4(3) of the Civil Law Act 1956. The court held that the non-assignment clauses in the contracts were valid and binding on both parties, and the consent of the debtor was a prerequisite for a valid assignment. The court also found that the assignment was ineffective as it was made without the debtor's consent, and the plaintiff's claim as an assignee was dismissed. The Federal Court, per Raus Sharif PCA (as he then was) stated: “[41] We have subjected these documents to scrutiny. With respect we are unable to agree with Merita's contentions. Since it is our finding that the element of consent is an important prerequisite, the fact that there existed an assignment between Merita and Benatulin did not strengthen Merita's case as the contract stipulated that consent by the debtor (DBP) was a prerequisite before a valid assignment could be made. Nowhere did Merita highlight to us that this has been adhered to. At the risk of repeating ourselves, we reiterate here that it is an implied term of the contract that there could be no assignment by Benatulin of its rights under the 1997 contract unless the prior written consent of DBP was obtained. An attempted assignment of contractual rights in breach of a contractual prohibition was ineffective to vest the contractual rights in Merita. [42] Further, it is significant to note that the purported assignment P2 which formed the basis of Merita's claim was dated and stamped on 22 April 1998 although notice of such an assignment was given to DBP as early as 23 August 1996. On this issue the Court of Appeal found that since the assignment at P2 was dated and stamped at a much later date supported the conclusion that the purported assignment in P2 was not served on DBP. [43] In our judgment, the point of critical importance was not whether notice of assignment was given to DBP but whether Benatulin had obtained DBP's consent before executing the assignment with Merita. As we have alluded to earlier since Benatulin had failed to secure DBP's consent, hence DBP was, therefore, not bound to honour Merita's request and had rightfully refused to recognise the instruction by Benatulin to make payment to Merita. The purported assignment which lacked the consent of DBP for the purchases made under the said letters were unenforceable against DBP. It follows that the purported assignment by Benatulin to Merita without the consent of DBP constituted a breach of cl. 23 of the 1997 contract. Merita's claim as an assignee must, therefore, fail. Further, this court cannot allow Merita's claim against DBP as the payment due under the purchases made pursuant to the said letters had already been paid by DBP to Benatulin and CFP. (emphasis added) [59] The evidence presented by the First and Second Defendants, particularly the absence of any averment or documentation in the Plaintiff's submissions indicating that the consent of the Third Defendant was obtained, critically undermines the Plaintiff's position. The lack of such consent renders any assignment stemming from the Consent Judgment not only ineffectual but also potentially illegal. This aligns with the findings of the Learned High Court Judge in the winding up proceedings in respect of the Petition, where it was explicitly stated that the purported assignment via the Consent Judgment was invalid due to the lack of consent from the Third Defendant. This Petition involves the petitioner, SPK-Sentosa Corporation Berhad (In Liquidation), the Plaintiff in this instant case, seeking to wind up the respondent, TRW Boulevard Square Sdn Bhd, the Third Defendant in this instant case for failing to pay debts under a statutory demand pursuant to Section 465(1)(e) and 466(1)(a) of the Companies Act 2016. The Petition was opposed by Ambank Islamic Berhad, a creditor of the respondent, and supported by two other creditors. The main issues were whether there was a valid assignment of rights over the Arbitration Award granted in favour of Pembinaan SPK Sdn Bhd (the petitioner’s subsidiary) against the respondent, to the petitioner via a consent judgment, and whether the petitioner was consequently a creditor of the respondent for purposes of presenting the Petition. The High Court analysed the Consent Judgment and held that it merely declared the petitioner's rights over the Arbitration Award and did not legally assign those rights. Hence, there was no valid assignment to the petitioner. The court also relied on Clause 1.7, the non-assignment clause requiring the respondent's consent for any assignment, which was not obtained. Therefore, the petitioner had no basis to claim as a creditor and present the Petition. The petition was accordingly dismissed. My learned brother, Nadzarin Wok Nordin J stated in his judgment: “76. I am thus bound to follow the ratio in Merita Merchant Bank Singapore Ltd (supra) and am not bound to follow the decision in the Australian case of Brali v Hyundai Corporation (1988) 84 ALLR176 (NSWSC) or, with respect, the earlier decision on equitable assignments as per the Supreme Court in Public Finance Bhd v Scotch Leasing Sdn Bhd [1996] 2 MLJ 369 cited by learned counsel for the Supporting Creditors, to which this Court holds that in the case before me, the said non assignment clause at clause 1.7 of the Agreement between the Respondent and PSPK had made the consent of the other party a pre condition before the debt could be assigned and thus the purported assignment vis a vis the Consent Judgment was not valid as no consent was obtained as the Respondent had not consented to the same.” [60] Moreover, the court notes the inconsistency in the Plaintiff's approach. Initially, the Plaintiff agreed to the Consent Judgment without any requirement for the execution of a deed of assignment. The subsequent introduction of this requirement, approximately one and a half years later, without prior consultation with the First and Second Defendants and unilaterally prepared by the Plaintiff, suggests a shift in the Plaintiff's stance. This shift, as argued by the First and Second Defendants, is indicative of an approach of approbation and reprobation, as elucidated in Express Newspapers plc v News (UK) Ltd and others [1990] 3 All ER 376. The Plaintiff cannot be permitted to adopt two inconsistent positions – initially accepting the Consent Judgment without the requirement of a deed of assignment and later imposing such a requirement. [61] Consequently, the court rejects the Plaintiff's application for a consequential order to compel the First and Second Defendants to sign the deed of assignment. The First and Second Defendants are not legally bound to sign the deed of assignment, and the Plaintiff cannot enforce this requirement under the current circumstances. The Consent Judgment, as recorded, does not extend to or include an obligation on the First and Second Defendants to sign a deed of assignment, particularly in the absence of the requisite consents. Costs [62] The First and Second Defendants have proposed that any costs incurred in this process ought to be borne by the Plaintiff’s Liquidator personally. This position is grounded in the assertion that the Plaintiff, being a wound-up company, cannot effectively bear the costs, and therefore, any award against the Plaintiff would be ineffectual. The First and Second Defendants draw upon the case of Markcon Sdn. Bhd. (In Liquidation) v Resilient Construction Sdn. Bhd. And Labtec Sdn. Bhd. & Anor. (Opposing Creditors) [1994] 1 CLJ 271 where it was held that costs could be awarded personally against a liquidator in instances of misconduct or unnecessary proceedings. [63] The First and Second Defendants argue that the Liquidator’s actions, particularly in relation to the filing of Enclosure 10, amount to an abuse of process and an attempt to unilaterally alter or vary the terms of the Consent Judgment. They contend that this act was unnecessary and vexatious, and that it imposed undue burdens on them, thus justifying a personal cost order against the Liquidator. [64] However, having thoroughly examined the evidence and arguments presented by both parties, the court finds that the Plaintiff’s application for consequential orders, while ultimately unsuccessful, does not warrant the imposition of costs on the Liquidator personally. The Liquidator’s decision to bring this action appears to have been motivated by a genuine belief that it was in the best interests of the company, particularly in seeking to enforce the terms of the Consent Judgment. There is a lack of substantial evidence to suggest misconduct or a frivolous approach in the Liquidator’s pursuit of this matter. [65] While the First and Second Defendants’ concerns regarding the potential alteration of the Consent Judgment are noted, the court does not find these concerns sufficient to categorise the Liquidator’s actions as constituting an abuse of process. The Liquidator’s conduct seems to have been within the realm of his professional judgment and duties, especially in light of the complexities surrounding the enforcement of the Consent Judgment and the deed of assignment. [66] Nevertheless, in accordance with the principles of fairness and equity, and considering the outcome of the case, the court orders that the costs incurred in this matter shall be borne by the Plaintiff. This decision is made in the context of the unsuccessful application for consequential orders by the Plaintiff, and the absence of sufficient grounds to impose these costs personally on the Liquidator. The court thereby adjudges that the First and Second Defendants' proposal for personal liability of the Liquidator for costs is not upheld, but the Plaintiff is to bear the costs of the proceedings. Conclusion [67] In the premise, the Plaintiff’s application in Enclosure 10 is dismissed with costs of RM4,000 to be paid by the Plaintiff to the First and Second Defendants. 3 January 2024 ATAN MUSTAFFA YUSSOF AHMAD Judge Kuala Lumpur High Court (Commercial Division) Counsel: For the Plaintiff: Syereen Tang (Messrs Kesavan) For the First and Second Defendants: Nicholas Poon (Messrs. Kit & Associates)