Wednesday, 7 December 2011

MALAYSIA-A RESTATEMENT OF THE EXISTING LAWS: STAY OF EXECUTION OF JUDGMENT PENDING APPEAL (IN RELATION TO A WINDING-UP PETITION)


In Motif Era Sdn Bhd v Hock Kheng Construction Sdn Bhd [2011] MLJU 644, it was held that:-

"...It is trite that for an application for a stay of execution, the onus is on the applicant to demonstrate the existence of special circumstances. An appeal itself shall not operate as a stay of execution unless the court so orders and the paramount consideration governing an application for such a stay is that the appeal, if successful, should not be rendered nugatory; see Kosma Palm Oil Mill Sdn Bhd (supra).
On the meaning of 'special circumstances', learned counsel for the Applicant urged this Court to adopt the approach in Jaya Harta Realty Sdn Bhd (supra) where His Lordship Vicent Ng J (as he then was) had held, inter alia that:

"Held:
Thus 'special circumstances' does not mean very special or exceptional or peculiar circumstances but is a term to denote a combination of certain determining factors that are demonstrated by affidavit evidence to persuade the court that it is a just and appropriate case to grant a stay of execution in the circumstances."

InLeong Poh Shee v. Ng Kat Chong [1966] 1 MLJ 86, His Lordship Raja Azlan Shah J (as His Royal Highness then was), on the other hand gave the meaning of the term 'special circumstances' to be:
"Special circumstances, as the phrase implies, must be special under the circumstances as distinguished from ordinary circumstances. It must be something exceptional in character, something that exceeds or excels in some way that which is usual or common."

Special circumstances need not be 'very' special or very exceptional circumstances but must nevertheless be exceptional in character and unusual or uncommon as distinct from ordinary circumstances. I think the definition given by His Lordship Raja Azlan Shah J above is clear enough and 'special circumstances' should not be accorded with any other too liberal interpretation for otherwise, its meaning and purpose would be defeated.
From what has been deposed by the Applicant's deponent vide the aforesaid affidavit in support, the special circumstances seem to be that the execution proceeding would harm the construction business of the Applicant wherein their bank accounts would be frozen and they would be deprived from doing their business; in addition, their workers would be deprived of their source of income. I find all these to be common consequences as a result of a successful winding up petition. On this point, His Lordship Abdul Hamid Mohamad JCA (later CJ) has proposed a solution to all these fears when he held in Ming Ann Holdings Sdn Bhd (supra), inter aiia, as follows:
"Held:
(3) On the facts, the grounds relied on by the applicant are nothing more than 'fear of losing'; fear of losing business, fear of losing customers, fear of losing suppliers; fear of losing goodwill, fear of not being able to collect its debts from third parties, in case the applicant company is wound up. All that the applicant has to do to avoid such 'fears' is to settle the judgment debt. These factors are not 'special circumstances' nor do they show that the appeal, if successful, will be rendered nugatory. They are nothing unusual. Execution is a natural process after obtaining a judgment."

Therefore I hold that the fears of the Applicant's bank account being frozen and that their workers may probably lose their job are not special circumstances as, to reiterate, these would probably be the natural consequences if a company is unable to settle a debt, for example, which leads to a winding up proceeding. The Applicant could eliminate this problem by settling the judgment debt.
On the submission that the Applicant has a counterclaim in this case, I agree with Respondent's submission and the decision in Eddie Lee Kim Tah's case that the existence of a counterclaim cannot be construed as a special circumstances for the purposes of an application for stay of execution.
The issue left to be considered is whether the grounds relied on by the Applicant will render the appeal, if successful, nugatory. I am of the view that the contention of the fear of losing the business, the bank account being frozen and the workers running the risk of out of job on account of the Respondent's execution of the judgment, does not render the appeal if successful, nugatory. ...".

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