Xiao Qiang Holidays Sdn. Bhd. v Betelnut Mobile Sdn. Bhd. (KA-22NCvC-57-12/2023)

This application arises from a commercial dispute between the Plaintiff, Xiao Qiang Holidays Sdn. Bhd., and the Defendant, Betelnut Mobile Sdn. Bhd., concerning a Management Agreement dated 7.6.2023 in relation to a restaurant business known as “Tubotel” located in Langkawi. 09/06/2026 23:49:07 KA-22NCvC-57-12/2023 Kand. 72 S/N nk63tgUzESRpxxsLXS0kw

Under the terms of the Management Agreement, the Plaintiff was granted the exclusive right to manage and operate the said business for a period of five (5) years. In consideration thereof, the Plaintiff agreed to pay a monthly management fee of RM8,000.00 for the first year, together with a security deposit amounting to

The relationship between the parties subsequently deteriorated. The Plaintiff vacated the premises on 31.8.2023 and thereafter issued a notice dated 7.9.2023 purporting to terminate the Management Agreement. As highlighted during the oral submissions, the said notice was issued abruptly and failed to state any specific reasons, grounds, or breaches relied upon by the Plaintiff to justify the termination.

Thereafter, the Defendant issued its own notice of forfeiture and termination dated 13.10.2023 on the ground that the Plaintiff had failed to pay the agreed monthly management fees and had further failed to maintain the premises in accordance with the terms of the Management Agreement.

Arising from the aforesaid dispute, the Plaintiff commenced this action against the Defendant. Upon completion of the full trial, the High Court, presided over by the former judge, delivered judgment in favour of the Plaintiff. The learned judge awarded the Plaintiff special damages in the sum of RM440,914.96 together with costs of RM15,000.00. The Defendant’s counterclaim was dismissed. S/N nk63tgUzESRpxxsLXS0kw

Dissatisfied with the said decision, the Defendant filed a Notice of Appeal to the Court of Appeal.

Following the delivery of the judgment, the Plaintiff initiated enforcement proceedings by way of a Writ of Seizure and Sale . Pursuant thereto, the court bailiff seized the Defendant’s business properties. The seized items were valued at approximately RM141,700.00, and a public auction was scheduled.

The Defendant then filed the present application in Enclosure 49 seeking a stay of execution of the High Court judgment pending the final disposal of the appeal (“this Application”). The Defendant contended that immediate execution would severely prejudice and potentially cripple its business operations and livelihood.

For completeness, this Court notes at the outset that the Defendant's application for a stay of execution is invoked pursuant to the specific statutory mechanism under Order 45 rule 11 of the Rules of Court 2012, read together with the inherent jurisdiction of the Court under Order 92 rule 4 of the same Rules.

Having carefully perused the cause papers, the respective affidavits, and having heard the extensive oral submissions advanced by learned counsels for both the Plaintiff and the Defendant, this Court S/N nk63tgUzESRpxxsLXS0kw allows the Defendant’s application partially. A conditional stay of execution is granted.

In arriving at this decision, this Court has distilled the competing arguments and will systematically address the application through four central themes: firstly, the procedural preliminary objection raised by the Plaintiff; secondly, whether the merits of the appeal can constitute special circumstances; thirdly, the risk of a nugatory appeal arising from the Plaintiff's financial precarity; and finally, the equitable balancing of competing interests in ordering a stakeholder arrangement. Issue 1: The Preliminary Objection on the Defective Jurat

Before delving into the substantive merits, this Court must address a preliminary objection raised by the Plaintiff regarding the admissibility of the Defendant's supporting affidavit (Enclosure 50). The Plaintiff contended that the deponent, an Austrian citizen who testified in English during the trial, affirmed the Bahasa Malaysia affidavit without the requisite translation jurat in Form 74(D) of the Rules of Court 2012 ("RC 2012"). In the absence of such a jurat, the Plaintiff argued there was no evidence the contents had been properly interpreted to the deponent, rendering the affidavit fundamentally flawed.

In response, the Defendant submitted that Form 74(A) was the applicable standard. More importantly, the Defendant highlighted that a rectified affidavit (Enclosure 56) containing the precise S/N nk63tgUzESRpxxsLXS0kw curative jurat was filed later. This was filed on the twelfth day from the filing of this Application, comfortably within the 14-day timeline mandated by Order 32 rule 13(2)(a) of the RC 2012.

This Court is not persuaded that the initial omission of the translation jurat renders the Defendant’s application fatally defective. The Plaintiff did not dispute that the contents of the rectified Enclosure 56 were entirely identical to the original Enclosure 50. Consequently, the Plaintiff was fully apprised of the substantive evidence and suffered absolutely no prejudice.

For completeness, the Plaintiff in its written submissions also mounted a similar procedural attack against the Defendant's Affidavit in Reply (Enclosure 55), alleging it suffered from a similar jurat defect and was filed out of time. This Court finds no merit in this secondary objection. As correctly rebutted by the Defendant, Enclosure 55 was filed on the seventh day following receipt of the Plaintiff’s Affidavit. This falls strictly within the 14-day period mandated by Order 32 rule 13(2)(c) of the RC 2012, and the transient jurat irregularity remains similarly curable under the overarching principles of substantial justice.

In addressing this procedural non-compliance, this Court is further guided by the Court of Appeal decision in Chong Keat Realty Sdn Bhd v Ban Hin Lee Bank Bhd [2003] 3 CLJ 532, which held that when a party complains of a procedural breach, the primary question the judicial arbiter must ask is what injustice has the party S/N nk63tgUzESRpxxsLXS0kw complaining suffered by reason of the procedural breach. As established, the Plaintiff suffered absolutely no prejudice.

It is a well-entrenched legal philosophy that procedural rules are handmaids to justice, not its master. In Megat Najmuddin Dato’ Seri (Dr) Megat Khas v Bank Bumiputra Malaysia Bhd [2002] 1 CLJ 645, the Federal Court powerfully reminded judicial arbiters that the duty to ensure justice is done "far outweighs any procedural technicality preventing it from being done... uninhibited by the technicalities strewn in its path."

Giving effect to the statutory mandate in Order 1A of the RC 2012, this Court rules that the overriding interest of justice must excuse this curable irregularity. The preliminary objection is accordingly dismissed. Issue 2: The Merits of the Appeal Do Not Constitute Special Circumstances

The substantive law governing a stay of execution is trite. An appeal does not operate as an automatic stay. The burden lies strictly on the applicant to establish "special circumstances" warranting a halt to enforcement.

In discharging this burden, the Defendant vigorously attacked the merits of the learned trial Judge's decision. Learned counsel for the Defendant highlighted alleged glaring evidential errors, pointing out S/N nk63tgUzESRpxxsLXS0kw that the trial court conflated the management of the physical premises with the business itself, ignored evidence of management fees allegedly paid until January 2029, allowed an RM92,000.00 claim for prepayments relating to unverified renovation items such as an aquarium and aluminium works without supporting invoices, and awarded RM34,000.00 for a chef's salary devoid of employment proof. The Defendant argued that enforcing a judgment replete with such gaps would occasion double jeopardy. During the oral submissions, the Defendant's counsel further emphasised this discrepancy, pointing out that despite operating in the small jurisdiction of Pulau Langkawi, the Plaintiff made no attempt to independently verify the status of the premises with Lembaga Pembangunan Langkawi (LADA), nor did they call any LADA officer to testify at the trial to substantiate their claim of misrepresentation.

Furthermore, the Defendant highlighted the sheer absurdity of the Plaintiff's pleaded case, pointing out that the Plaintiff claimed to be misled about the management rights expiring in 2012, a full 11 years before the Management Agreement was even executed in 2023. The Defendant further highlighted the chronological incongruity of the Plaintiff's pleaded case, which asserted misrepresentations that management rights would expire in 2012, some eleven years before the Management Agreement was executed in 2023. Learned counsel forcefully argued that the oral testimonies adduced to support these massive prepayments lacked contemporaneous documentary backing. Enforcing a judgment carrying such deep chronological and evidential friction would, in the Defendant's submission, occasion grave prejudice. S/N nk63tgUzESRpxxsLXS0kw

This Court must categorically reject this limb of the argument. As affirmed by the Federal Court in Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2003] 4 CLJ 1, special circumstances must relate strictly to the enforcement of the judgment, not to the validity or correctness of the judgment itself.

A court hearing a stay application does not sit as a mini-appellate tribunal. The Defendant heavily relied on Section 114(g) of the Evidence Act 1950 and the case of Sunlite Textile Sdn Bhd v Motidal Realty Sdn Bhd (No.2) [2008] 7 CLJ 97 to argue that an adverse inference must be drawn against the Plaintiff for the missing invoices. However, such evidentiary evaluations and statutory inferences are matters exclusively reserved for the appellate court's ventilation. Financial difficulty resulting from having to satisfy an allegedly flawed judgment is an ordinary consequence of litigation, not a special circumstance.

In tandem with the evidential gaps, the Defendant advanced a specific legal defence in its written submissions, arguing that the Plaintiff’s abrupt termination constituted an unlawful anticipatory breach under the principles elucidated in “Chitty on Contracts” (see Chitty on Contracts, Volume 1: General Principles, 31st Ed, p. 1719). The Defendant contended that the Plaintiff acted prematurely, treating the agreement as discharged upon an unsubstantiated assumption of the Defendant's inability to perform. While these arguments present a formidable triable issue, the determination of an anticipatory breach directly challenges the S/N nk63tgUzESRpxxsLXS0kw correctness of the substantive judgment—an evaluation strictly reserved for the appellate calculus. Issue 3: Financial Precarity and the Risk of a Nugatory Appeal

In evaluating this ground, this Court must first express its initial reluctance. As a well-entrenched legal principle, it is exceptionally challenging to justify staying the payment of a purely monetary judgment. However, notwithstanding this strict threshold and the irrelevance of the appellate merits discussed above, the Defendant has successfully established a recognised special circumstance under the second limb of its argument: the genuine risk of the appeal being rendered nugatory.

The Defendant adduced uncontroverted financial reports from the Companies Commission of Malaysia (SSM) revealing that the Plaintiff operates with consecutive financial losses and negative net current assets exceeding RM433,000.00.

Furthermore, the Plaintiff's failure to adduce any compelling evidence to rebut the Defendant's documentary proof of its financial precarity is fatal. Applying the Court of Appeal principle in Ng Hee Thoong and Anor v Public Bank Bhd [1999] 1 MLRA 600, it is a well-settled rule of evidence that where one party makes a positive assertion upon a material issue, the failure of his opponent to contradict it is usually treated as an admission. S/N nk63tgUzESRpxxsLXS0kw

In arriving at its finding, this Court is guided by the recent High Court decision in Geonex (M) Sdn Bhd lwn. Bayu Mining Sdn Bhd & Yang Lain [2025] MLRHU 817, which affirmed that uncontroverted SSM financial data is valid and potent evidence to demonstrate a party's financial incapacity. The Plaintiff failed to adduce any compelling evidence to rebut this documentary proof of its financial precarity.

As held by Augustine Paul JCA in Kosma Palm Oil Mill, and fortified by the Supreme Court in Government of Malaysia v Jasanusa Sdn Bhd [1995] 1 MLRA 213, the risk of an appeal becoming nugatory is the most common genus of a special circumstance. Should the RM440,914.96 judgment sum be paid directly to the Plaintiff, there is a severe and genuine probability that the funds will be dissipated and become irretrievable, rendering the Defendant's appeal an illusory exercise. Issue 4: Balancing Competing Interests and the Conditional Stay

Having established a special circumstance, the final inquiry is the nature of the stay to be granted. A successful litigant should not be arbitrarily deprived of the fruits of their litigation. Yet, immediate execution would be highly disruptive for the Defendant, a small operator facing the public auction of RM141,700 in seized assets against a liability of RM480,000, despite allegedly collecting only RM38,000 during the brief venture. As the Defendant vehemently argues in their reply submissions, should these seized assets be auctioned off to third parties, the operational capacity of the S/N nk63tgUzESRpxxsLXS0kw Defendant's business would be severely impacted. The Defendant contended that the resulting damage would be wholly irreparable, making it impossible to restore them to their original position should the appeal succeed. However, while this Court acknowledges the harshness of allowing an immediate physical auction to proceed, it cannot accept this as justification for wholly excusing the Defendant from securing a valid monetary judgment.

The modern jurisprudential approach requires a dynamic balancing of these competing interests. During the oral hearing, both learned counsels dedicated considerable time to dissecting the Court of Appeal and Federal Court decisions in Renew Capital Sdn Bhd & Ors v ADM Ventures (M) Sdn Bhd & Anor And Another Appeal [2022] 8 CLJ 817. The Defendant relied heavily on this case to argue for an unconditional stay or, alternatively, a conditional stay, suggesting it represents a paradigm shift in appellate courts' trend regarding monetary judgments.

To properly contextualise its application, it is necessary to examine the material facts and ratio of Renew Capital as ventilated before this Court. As highlighted by the Plaintiff's counsel, Renew Capital involved a massive monetary judgment of RM 25 million. The Court of Appeal, presided over by Lee Swee Seng JCA (now, FCJ), recognised the traditional strictness against staying monetary judgments but noted at paragraphs 28 and 32 that courts are increasingly inclined to explore partial conditional stays. The Court of Appeal established the ratio that a court must maintain a dynamic balance of the competing concerns so that no one should be S/N nk63tgUzESRpxxsLXS0kw deprived of the fruits of their litigation. Taking into account the sheer magnitude of the RM 25 million sum and the parties' financial capacity, the Court of Appeal ordered a 50% conditional stay, requiring that a portion be paid to a stakeholder.

On appeal to the Federal Court, an unconditional stay of execution for the global sum was, nonetheless, granted. Armed with this ruling, the Defendant forcefully urged this Court to follow the apex court's trajectory and grant an outright stay.

This Court must respectfully decline the Defendant's invitation to follow the Federal Court's outcome in Renew Capital for two pertinent reasons. First, the apex court's decision was confined to a standard order (Perintah), unbacked by written grounds of judgment. A survey of the current legal journals confirms that no formal written grounds have been handed down. In the absence of an articulated ratio decidendi, the conceptual foundations of the Federal Court's intervention remain unventilated. It is therefore legally precarious for this Court to rely on an unreasoned order to circumvent the entrenched principles of Kosma Palm Oil Mill.

Second, the factual matrix is highly distinguishable. The RM 25 million sum in Renew Capital inherently carries a high risk of being irretrievable. By contrast, the present case involves a judgment of RM 480,000 against a small enterprise in Langkawi. As astutely highlighted by the Defendant's counsel, even though the parties in Renew Capital possessed massive corporate financial capacities S/N nk63tgUzESRpxxsLXS0kw where an RM 25 million refund might be easily absorbed, the Court of Appeal still deemed it necessary to order a 50% stakeholder arrangement. Applying that proportionality to the present matrix, where the Defendant allegedly collected merely RM 38,000 during the brief venture, enforcing a RM 480,000 judgment immediately would be wholly disproportionate and commercially devastating.

In applying this ratio, this Court entirely agrees with the pertinent submission raised by learned counsel for the Plaintiff, Mr. V. Rajadevan, during the oral hearing. He correctly cautioned that the decision in Renew Capital must be read on its facts and does not abrogate the entrenched principles of Kosma Palm Oil Mill. Renew Capital does not open the floodgates to stay monetary judgments without cause; the strict prerequisite of proving a special circumstance remains mandatory. However, once a special circumstance (such as nugatoriness) is established, Renew Capital empowers the Court to employ a dynamic balancing mechanism via a conditional stay rather than an outright refusal.

However, this Court is entirely agreeable to adopting the ratio decidendi established by the Court of Appeal in Renew Capital. Applying the equitable balancing act to the material matrix of the present case, an unconditional stay would unjustly deprive the Plaintiff of a valid judgment, while immediate execution would be commercially disastrous to the Defendant. Therefore, the dynamic balancing of competing interests advocated in Renew Capital is best achieved through a stakeholder arrangement. S/N nk63tgUzESRpxxsLXS0kw

The Court is not oblivious to the Plaintiff's apprehension. In its Affidavit in Reply, the Plaintiff exhibited Facebook advertisements indicating the Defendant's intention to close its business and sell its assets, raising legitimate fears of asset dissipation. However, the mechanism of a conditional stay perfectly neutralises this risk. By depositing the full judgment sum into a stakeholder account, the Plaintiff's fruits of litigation are absolutely secured, rendering the Defendant's potential sale of physical assets irrelevant to the Plaintiff's recovery.

This approach aligns with the fundamental principle governing stay applications. As established in Kosma Palm Oil Mill and affirmed in Renew Capital, the general rule is that a successful litigant is entitled to the fruits of its litigation, and a monetary judgment shall not be stayed unless the applicant can demonstrate circumstances that are special, not ordinary, common or usual. As this Court expressly remarked during the oral hearing, it is fundamentally challenging to stay a purely monetary judgment.

Furthermore, in directing the full judgment sum to be secured rather than a partial stake, this Court has parsed the Defendant's own impassioned arguments regarding its restricted financial capacity. This line of reasoning, however, cuts both ways. The more acutely the Defendant emphasises its commercial fragility and nominal revenue during the venture, the more urgently it underscores the need to insulate the judgment creditor from asset dissipation. S/N nk63tgUzESRpxxsLXS0kw

If the payment is waived or only partially secured at this juncture, there is a severe risk that the Defendant would dissipate its assets by the time the appeal is concluded. Should the appeal be dismissed, the successful Plaintiff would be left with a paper judgment and entirely deprived of the fruits of its victory. Therefore, ordering the full judgment sum to be paid into a stakeholder account is the only equitable mechanism. It enforces the strict principle that monetary judgments must be paid, while concurrently protecting the Defendant's funds from the Plaintiff's precarious financial situation pending the appeal.

For the record, this Court notes that in its written submissions (Enclosure 61), the Defendant volunteered to deposit a partial sum of RM50,000.00 into the stakeholder account. However, applying the proportionality and dynamic balancing test discussed above, this Court finds that accepting such a fractional sum would inadequately protect the Plaintiff's judgment of over RM480,000.00. Permitting a deposit of merely RM50,000.00 would leave the Plaintiff exposed to the high risk of dissipation that the stay seeks to prevent. Therefore, only a deposit of the full judgment sum satisfies the equitable scales of justice.

It is therefore highly commendable that during the oral hearing, learned counsel for the Plaintiff, Mr V. Rajadevan, pragmatically conceded to a stakeholder arrangement. During the hearing, Mr. Rajadevan candidly articulated the pragmatism of this arrangement, stating on record: "I'm more than happy. We'll all live with it, because then my client will be assured that if they win the appeal, we will get S/N nk63tgUzESRpxxsLXS0kw our money. We don't have to worry that if the appeal is dismissed, we can't get the money." This concession perfectly crystallises the justice of the case. It secures the fruits of the Plaintiff's litigation while simultaneously insulating the Defendant from the genuine risk of a nugatory appeal.

Premised on the foregoing reasons, this Court makes the following orders: a) The Defendant’s application in Enclosure 49 is allowed in the form of a Conditional Stay of Execution. b) The Defendant shall, within thirty (30) days from the date of this Order, deposit the full judgment sum, interest, and costs into the client account of the Plaintiff's solicitors, Messrs Rajadevan & Associates. and c) The said solicitors shall hold the funds as stakeholders in an interest-bearing or fixed deposit account pending the final disposal of the Defendant’s appeal at the Court of Appeal. Dated: 9th June, 2026 S/N nk63tgUzESRpxxsLXS0kw ------------------------------------------------------ YA. Dr. Hj. JOHN LEE KIEN HOW @ MOHD JOHAN LEE JUDGE HIGH COURT OF MALAYA ALOR SETAR Solicitor : V Rajadevan For the Plaintiff Messrs. Rajadevan & Associates Solicitor : Lee Teong Ghee & Mohd Afzan Bin Mohd For the Sarwana Defendant Messrs T G Lee & Associates Authorities Cases Chong Keat Realty Sdn Bhd v Ban Hin Lee Bank Bhd [2003] 3 CLJ 532 Geonex (M) Sdn Bhd lwn. Bayu Mining Sdn Bhd & Yang Lain [2025] MLRHU 817 Government of Malaysia v Jasanusa Sdn Bhd [1995] 1 MLRA 213 Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd [2003] 4 CLJ 1 Megat Najmuddin Dato’ Seri (Dr) Megat Khas v Bank Bumiputra Malaysia Bhd [2002] 1 CLJ 645 Ng Hee Thoong and Anor v Public Bank Bhd [1999] 1 MLRA 600 Renew Capital Sdn Bhd & Ors v ADM Ventures (M) Sdn Bhd & Anor And Another Appeal [2022] 8 CLJ 817 Sunlite Textile Sdn Bhd v Motidal Realty Sdn Bhd (No.2) [2008] 7 CLJ 97 Statutes Evidence Act 1950, s. 114(g) Rules of Court 2012, O. 1A; O. 32 r. 13(1), 13(2)(a), 13(2)(c); O. 41 r. 1(7), 1(8); O. 45 r. 11; O. 92 r. 4; Form 74(A) & Form 74(D) Treaties Chitty on Contracts, Volume 1: General Principles (31st Edition), p. 1719. S/N nk63tgUzESRpxxsLXS0kw