Wong Kum Pun v Ng Lay @ Ng Soo (BA-12B-89-12/2023)

This is an application by the Appellant/Defendant in Enclosure 19 for an order for a stay of execution of the judgment of the Sessions Court dated 24 March, 2023, pending the disposal of the appeal against that decision.

The pertinent issue raised in the present application is straightforward. The prevailing question is whether there were special circumstances to justify the granting of a stay.

Alternatively, considering the fact that a notice of the presentation of a bankruptcy petition against the debtor has been initiated, the question arose as to whether the present stay application has been rendered academic.

The Appellant/Defendant, as the judgment debtor, argued that if a stay were not granted, the appeal would be rendered nugatory if he were to succeed at the Court of Appeal.

In addition, it was his contention that he has merits in his defence to the Plaintiff’s claim and this amounted to special circumstances, justifying an order for a stay. S/N azYkZVI2x0akvJAveXfrxQ **Note : Serial number will be used to verify the originality of this document via eFILING portal 3

The principal argument advanced by the Respondent/Plaintiff is that an appeal does not operate as a stay of execution under the decision appealed against.

The Respondent/Plaintiff further underscored the point that the judgment of the Sessions Court dated 24 March, 2023 was a monetary judgment (after damages were assessed) pursuant to an earlier decision by the Sessions Court for summary judgment for vacant possession dated 5 April, 2022.

More importantly, the Respondent/Plaintiff averred that merits in the appeal do not constitute as special circumstances warranting a stay of execution.

The principle that an appeal shall not operate as a stay of execution is encapsulated in Order 55 rule 16 of the Rules of Court 2012. The relevant provisions stipulate as follows: 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. S/N azYkZVI2x0akvJAveXfrxQ

The Court appealed from or the High Court may grant an order of stay of execution on such terms as it thinks fit. [10] The exercise of the Court’s discretion is dictated by the “special circumstances” rule. [11] In Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2003] 4 CLJ 1; [2004] 1 MLJ 257; [2003] 1 MLRA 536 (“Kosma Palm Oil”), the Federal Court elucidated the “special circumstances” test in the following terms: [14] The resultant matter for determination are the factors or reasons that may constitute special circumstances. Generally stated, they are circumstances which go to the enforcement of the judgment (see Sarwari a/p Ainuddin v Abdul Aziz a/l Ainuddin [2000] 5 MLJ 391). With regard to the specific factors that constitute special circumstances, I refer again to Government of Malaysia v Datuk Haji Kadir Mohamad Mastan and another application where Ian Chin JC (as he then was) said at pp 520– 521: What, then, constitute special circumstances? It was said in Mohamad Mustafa v Kandasami (No 2) [1979] 2 MLJ 126, at p 127, that: ‘One of the determining factors that calls for consideration is whether by not making an order of stay of the execution it would make the appeal if successful, nugatory in that it would deprive an appellant of the results of the appeal. How S/N azYkZVI2x0akvJAveXfrxQ pertinent that factor would be may vary according to the circumstances of each particular case.’ [15] In Smith, Hogg & Co Ltd v The Black Sea and Baltic General Insurance Co Ltd 162 LTR 11, Scott LJ said at p 12: The Court of Appeal has had to consider this question some time ago and decided that the practice on appeals to the House of Lords was that stay of execution, pending such an appeal, would not be granted save under very exceptional circumstances, such as for instance, where execution would destroy the subject-matter of the action or deprive the appellant of the means of prosecuting the appeal. [16] In Rosengrens Ltd v Safe Deposit Centres Ltd (unreported, 19 July 1984, CA, Lexis Nexis) Dillon LJ said: The most common special circumstance is, normally no doubt, that it would be doubtful whether, if the judgment was enforced, the defendant would get his money back if the appeal subsequently succeeded. But there are others as, for instance, if there is a likelihood that the money the subject of the judgment, if paid over, would go to a foreign jurisdiction where the defendant would have difficulty recovering it. [17] Finally, in Re Kong Thai Sawmill (Miri) Sdn Bhd, Ling Beng Sung v Kong Thai Sawmill (Miri) Sdn Bhd & Ors (No 2), Lee Hun Hoe CJ (Borneo) in writing for the Federal Court said in clear and lucid terms at p 132: S/N azYkZVI2x0akvJAveXfrxQ An appeal which would be nugatory if stay was refused by reason of the poverty of the respondent would be an example of special circumstances. See Wilson v Church (No 2) (1879) 12 Ch D 454. Another example is that payment of a judgment debt would destroy the substratum of the appeal: Metropolitan Real and General Property Trust Ltd v Slaters and Bodega Ltd [1941] 1 All ER 310. However, an allegation on an appeal that there has been misdirection at the trial would not be sufficient to bring it within the special circumstances: Monk v Bartram (1891) 1 QB 346. [18] Halsbury’s Laws of England (4th Ed) Vol 17 at para 455 cites the following authorities as examples of special circumstances: that an appeal would be nugatory if stay was refused, by reason of the respondent’s poverty (Wilson v Church (No 2) (1879) 12 Ch D 454 (CA)); or if payment of a judgment debt destroys the substratum of the appeal (Metropolitan Real and General Property Trust Ltd v Slaters and Bodega Ltd [1941] 1 All ER 310 (CA)); absence from England without address of a party to whom money in Court was ordered to be paid out (Broadford v Young, Re Falconer's Trusts (1884) 28 Ch D 18 (CA)); that an administration order has been made against the estate or a debtor dead since judgment and before execution issued (Ranken v Harwood, Ranken v Boulton (1846) 5 Hare 215); judgment in favour of an alien enemy (Robinson & Co v Continental Insurance Co of Mannheim (1915) 1 KB 155; and judgment against an alien enemy company whose assets are subject to Treasury control (Leader v Direction de Disconto Gesellschaft (1915) 3 KB 154, (CA)). It is therefore clear beyond doubt that there are many factors that may constitute special circumstances and the fact that an appeal would be rendered nugatory if stay was refused is the most common one. It is an example of special circumstances. In other words, special circumstances is the genus of which nugatoriness is a species. If it has been shown that an appeal would be rendered nugatory S/N azYkZVI2x0akvJAveXfrxQ if stay was refused what it means is that a special circumstance has been established. Thus, they cannot be treated as separate heads and one cannot be an alternative to the other. Neither can one be accepted or rejected in favour of the other as they are inter-related. See Teow Guan & Ors v Kian Joo Holdings Sdn Bhd & Ors could have withstood scrutiny if it had merely referred to nugatoriness without rejecting special circumstances. As nugatoriness is a species of special circumstances, a mere reference to it is sufficient to convey the correct legal impression. Any attempt to restrict the grant of a stay to nugatoriness, quite apart from its impropriety, will severely restrict the grounds on which an applicant may rely. Learned counsel for the applicants is therefore wrong in submitting that the nugatory approach is not a matter for consideration in this case as what is relevant is only the special circumstances. He would have been correct if he had said that he was not relying on nugatoriness but on some other species of special circumstances. [12] Hence, on the relationship between nugatoriness and special circumstances, the Federal Court explained that “special circumstances is the genus of which nugatoriness is a species”. [13] The Federal Court in Kosma Palm Oil also held in no uncertain terms that “the merits of a party’s case in a stay application is not a relevant matter for consideration” (para 18). And at paragraph 22, the Federal Court said that it was “therefore unnecessary … to consider the merits of the respective case of the applicants and respondents” and added that: 23 The onus is on the applicants to demonstrate the existence of special circumstances to justify the grant of a stay of execution. The reasons must relate to the enforcement of the judgment. S/N azYkZVI2x0akvJAveXfrxQ [14] A provision that has a significant effect on the outcome of this present application is section 50 of the Insolvency Act 1967. Under the sub-heading of “Effect of Bankruptcy on Antecedent Transactions”, section 50 reads as follows: Restriction of rights of creditor under execution or attachment

(1) Where a creditor has issued execution against the goods or lands of a debtor, or has attached any debt due, or property belonging to him, he shall not be entitled to retain the benefit of the execution or attachment against the Director General of Insolvency unless he has completed the execution or attachment before the date of the bankruptcy order and before notice of the presentation of any bankruptcy petition by or against the debtor, or of the commission of any available act of bankruptcy by the debtor.

For the purposes of this Act —

an execution against goods or land is completed by seizure and sale, or in the case of an equitable interest in land by the appointment of a receiver;

an attachment of a debt is completed by receipt of the debt;

an attachment of property is completed by the sale of such property and the satisfaction out of the S/N azYkZVI2x0akvJAveXfrxQ proceeds of such sale of the judgment in execution of which the attachment was made. The Decision of this Court [15] It is evident from the provisions in Order 55 rule 16 of the Rules of Court 2012 that while an appeal shall not operate as a stay of execution, the Court appealed from or the High Court may grant an order of stay of execution on such terms as it thinks fit. [16] However, the onus is on the Appellant/Defendant to demonstrate the existence of special circumstances to justify the grant of a stay of execution. Any reasons advanced by the Appellant/Defendant must relate to the enforcement of the judgment. [17] Having considered the grounds relied by the Appellant/Defendant, this Court was unable to find special circumstances to warrant the grant of a stay of execution. As noted by the Federal Court in Kosma Palm Oil, “the merits of a party’s case in a stay application is not a relevant matter for consideration”. [18] Even if this Court were wrong in its above findings, there is an additional factor that influenced its decision to deny the order sought by the Appellant/Defendant. [19] In this case, bankruptcy proceedings has been initiated by the Respondent/Plaintiff judgment creditor against the Appellant/Defendant judgment debtor. A bankruptcy notice dated 8 August, 2023 was served S/N azYkZVI2x0akvJAveXfrxQ on the Respondent/Plaintiff. This triggered the application of section 50(1) of the Insolvency Act 1967. [20] As aptly stated in Ong Kong Kuan v Ong Kong Beng & Anor (CIMB Bank Bhd & Ors, Garnishees) [2023] AMEJ 2214; [2023] 1 LNS 2236; [2023] MLJU 2496; [2023] MLRHU 1802 “a judgment creditor has to tread with prudence and care as to whether he/she wants to initiate bankruptcy proceeding first before he/she applies for garnishment or writ of execution against the judgment debtor’s assets”. [21] The reason for the above caution is obvious. When a judgment creditor initiates bankruptcy proceedings, by virtue of section 50(1) of the Insolvency Act 1967, a judgment creditor “shall not be entitled to retain the benefit of the execution or attachment against the Director General of Insolvency unless he has completed the execution or attachment before the date of the bankruptcy order and before notice of the presentation of any bankruptcy petition by or against the debtor, or of the commission of any available act of bankruptcy by the debtor” (own emphasis). [22] Since the Respondent/Plaintiff judgment creditor in the present case has not completed the execution of the judgment debt, the presentation (and the pendency) of the bankruptcy petition meant that the Respondent/Plaintiff judgment creditor is barred from enforcing the judgment against the Appellant/Defendant judgment debtor (see Industrial Diseases Compensation Ltd v Marrons [2001] BPIR 600 and Nationwide Building Society v Wright and another [2010] Ch 318). S/N azYkZVI2x0akvJAveXfrxQ [23] In view of the restraint that has now been placed on the Respondent/Plaintiff judgment creditor, there is no necessity for the Appellant/Defendant judgment debtor to seek the order in Enclosure 19. [24] For the above reasons, the application in Enclosure 19 is dismissed with costs. [25] The Appellant/Defendant to pay the Respondent/Plaintiff costs of RM3,000, subject to allocatur. Dated: 3 October, 2024 sgd [CHOONG YEOW CHOY] Judicial Commissioner High Court of Malaya Shah Alam Counsel: Siti Zubaidah Jemadi for the Appellant (Messrs. Gary Wong & Co.) Arifah Abd Aziz for the Respondent (Messrs. Tengku Azlina, Rao, Low & Associates) S/N azYkZVI2x0akvJAveXfrxQ