724 Current Law Journal [2010] 9 CLJ

ABD RAHIM ABD RAHMAN & ORS A

v.

DMD INDUSTRIES SDN BHD & ORS;

KAMARIYAH HAMDAN & ORS (THIRD PARTIES)
B
HIGH COURT MALAYA, MUAR
UMI KALTHUM ABD MAJID JC
[CIVIL SUIT NO: 22-29-2000]
2 JULY 2010
C
CIVIL PROCEDURE: Execution - Stay - Application for an order for
stay of execution of a High Court judgment pending disposal of appeal to
Court of Appeal - Whether order for stay of execution merited - Special
circumstances - Rules of the High Court 1980, O. 55 r. 12
D
CIVIL PROCEDURE: Judgments and orders - Stay of execution -
Application for an order for stay of execution of a High Court judgment
pending disposal of appeal to Court of Appeal - Whether order for stay of
execution merited - Special circumstances - Rules of the High Court 1980,
O. 55 r. 12
E
This was an application by the second defendant under O. 55 r. 12
Rules of the High Court 1980 for an order for a stay of execution
of a judgment given by this court against it, pending the disposal
of its appeal to the Court of Appeal. The plaintiffs, the owners of
three pieces of land (‘said lands’), had entered into an agreement F
with the first defendant for the development of the said lands into
a housing estate. Subsequently, the first defendant executed a
facilities agreement with the second defendant and charged the said
lands (‘said charges’) to the second defendant as security for the
facilities agreement. The plaintiffs then filed a successful action G

against the second defendant for the cancellation of the said charges
and for the return of the said lands. The second respondent raised
five special circumstances to merit its application for an order of
stay: (i) in the event the said charges were discharged, the second
defendant would incur costs in re-registering the said charges if it H

succeeded in its appeal; (ii) in the event the said lands were
disposed of to third parties, the substratum of the appeal would be
lost; (iii) in the event the said lands were disposed of and the
second defendant succeeded in the appeal, the second defendant
would suffer a loss which could not be compensated; (iv) its appeal I

had merits and a good chance of success; and (v) the plaintiffs were
Singaporeans and were ordinarily resident in Singapore.
 Abd Rahim Abd Rahman & Ors v. DMD Industries
Sdn Bhd & Ors; Kamariyah Hamdan
[2010] 9 CLJ & Ors (Third Parties) 725

A Held (dismissing the application with costs):

(1) The costs of re-registering the said charges would not be

substantial and those costs in any event may be recovered
during the taxation of costs process. (para 9)
B
(2) As the plaintiffs’ claim against the second defendant primarily
concerned the validity of the said charges, the second defendant,
if it should succeed in its appeal, could still enforce the said
charges against the plaintiffs and the said lands. To this end,
the cancellation of the said charges and the return of the issue
C
documents of title to the plaintiffs would not render the
substratum of the second defendant’s appeal lost. If the second
defendant really believed that this was the effect, it would not
have raised the issue of needing to re-register the said charges.
As for the second defendant’s fears that the plaintiffs may
D
dispose of the said lands to third parties, the second defendant
had not provided proof that this event was likely to occur.
(para 10)

(3) In the event the said charges were declared valid on appeal, the
E second defendant may claim the value of the said lands against
the plaintiffs personally, and should that value fall short of the
loan amount given to the first defendant it may also claim the
balance of the monies owed by the first defendant from the
plaintiffs. Thus, it could not be said that the second defendant
F would have suffered a loss which could not be compensated in
these circumstances. Furthermore, the second defendant had not
alleged that the plaintiffs were not financially sound enough to
repay the value of the said lands (in the event of any disposal)
to the second defendant. (paras 11 & 12)
G
(4) The merits of the second defendant’s appeal were not a relevant
matter of consideration in this application for stay. Kosma Palm
Oil Sdn Bhd & Ors v. Koperasi Makmur (foll); Ming Aun Holdings
Sdn Bhd v. Danaharta Urus Sdn Bhd (foll). (para 14)
H
(5) The fact that the plaintiffs were Singaporeans and were residing
in Singapore did not constitute a special circumstance as they
had proven that they had substantial assets within the
jurisdiction of this court. Further, Singapore is a country listed
in the First Schedule to the Reciprocal Enforcement of
I
726 Current Law Journal [2010] 9 CLJ

Judgments Act 1958. This should reassure the second defendant A

that there is legal recourse against the plaintiffs should it
succeed in its appeal. (para 15)

(6) For the reasons stated above, there were no special

circumstances that merited this application being allowed. B
(para 16)
Case(s) referred to:
Kosma Palm Oil Mill Sdn Bhd & Ors v. Koperasi Serbausaha Makmur Bhd
[2003] 4 CLJ 1 FC (foll)
Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd [2002] 3 CLJ 38 C
CA (foll)

Legislation referred to:

Courts of Judicature Act 1964, s. 73
Rules of the High Court 1980, O. 55 r. 12
D
For the plaintiff - Raymond Mah; M/s Mah Weng Kwai & Assoc
For the defendants - Maziah Md Yamin; M/s Chee Siah Le Kee & Partners

Reported by Suresh Nathan

E

JUDGMENT

Umi Kalthum Abd Majid JC:

The Application F

[1] The second defendant applied in encl. 266 under O. 55 r. 12

of the Rules of the High Court (“RHC”) for an order for a stay of
execution of the judgment dated 17 November 2009 given by this
court against the second defendant (“the judgment”) pending the G
disposal of the second defendant’s appeal to the Court of Appeal.

Facts

[2] The plaintiffs are the registered owners of three pieces of land
H
(“the said lands”) all situated in the District of Muar, Johor. The
plaintiffs entered into a joint venture agreement dated 13 January
1994 with the first defendant (“JV Agreement”). By this JV
Agreement, the plaintiffs had agreed and had given permission to
the first defendant to develop the said lands into a housing estate.
I
The plaintiffs were also required, and did so executed, an irrevocable
 Abd Rahim Abd Rahman & Ors v. DMD Industries
Sdn Bhd & Ors; Kamariyah Hamdan
[2010] 9 CLJ & Ors (Third Parties) 727

A Power of Attorney dated 12 January 1994 in favour of the first

defendant in respect of the said lands (“the Power of Attorney”).
The purpose at intention of the Power of Attorney was to allow the
first defendant to do all things necessary to obtain the necessary
approvals and generally for development of the said lands into a
B housing estate. The purpose of a loan or finance obtained by the
first defendant in respect of the said lands was also expressly limited
for the purpose of developing the housing estate.

[3] After vacant possession of the said lands was delivered to the
C first defendant, the first defendant commenced the clearing and
filling works on the said lands but did not take further steps to
develop the said lands into a housing estate.

[4] Unbeknown to the plaintiffs, the first defendant negotiated

and executed a Facilities Agreement dated 9 January 1997 with the
D
second defendant (“the Facilities Agreement”). As security for the
Facilities Agreement, the first defendant charged the said lands to
the second defendant (“the said charges”). The plaintiffs did not
benefit in any way from the credit facilities given by the second
defendant to the first defendant.
E
[5] The plaintiffs then filed this civil action against the second
defendant for the cancellation of the said charges and for the return
of the said lands.

F [6] On 17 November 2009, YA Dato’ Ahmadi bin Haji Asnawi

allowed the plaintiffs’ claim against the second defendant and
ordered:

6.1. a declaration that the said charges in favour of the

second defendant in respect of the said lands are invalid
G
and without effect;

6.2. the second defendant to redeliver the duplicates of the

said charges to the Land Administrator at the Land
Office to cancel the said charges over the said lands
H within 14 days upon the service of the judgment;

6.3. the Muar Land Office to cancel the said charges. The
issue documents of title now kept by the second defendant
be sent to the Land Office for cancellation of the said
I charges and thereafter, the relevant documents of title be
returned by the second defendant to the plaintiffs within
14 days upon the service of the judgment.
728 Current Law Journal [2010] 9 CLJ

6.4. if the second defendant fails to execute Form 16N to A

discharge the charges within 14 days from the date of
service of the judgment, then the Senior Assistant Registrar
of the Muar High Court shall execute Form 16N for the
said charges and register them at the Land Office for the
discharge of the said charges; B

6.5. the second defendant be restrained from proceeding with

the application or action for public auction in respect of
the said lands; and
C
6.6. costs to be taxed.

Special Circumstances

[7] The general rule is that an appeal shall not operate as a stay
of execution unless the court 20 orders – see s. 73 of the Courts D
of Judicature Act 1964, Kosma Palm Oil Mill Sdn. Bhd. & Ors v.
Koperasi Serbausaha Makmur Bhd. [2003] 4 CLJ 1, FC. This general
rule is premised on the principle that the court will not deprive a
successful party of the fruits of his litigation. In order for me to
consider this stay application, the second defendant is required to E
prove by affidavit evidence that there are special circumstances
which warrant a stay order. What constitutes “special circumstances”
would depend on the facts of the case.

[8] The second defendant raised five special circumstances to

F
merit the stay order. They are:

8.1. in the event the said charges are discharged, the second
defendant would be put to cost and expense in re-
registering the said charges if it succeeds in the appeal;
G
8.2. in the event the said lands are disposed of to third
parties, the substratum of the appeal would be lost;

8.3. in the event the said lands are disposed of and the second
defendant succeeds in the appeal, the second defendant H
would suffer a loss which cannot be compensated;

8.4. there is merit and a good chance of success in the

appeal;

8.5. the plaintiffs are Singaporeans and are ordinarily resident I

in Singapore.
 Abd Rahim Abd Rahman & Ors v. DMD Industries
Sdn Bhd & Ors; Kamariyah Hamdan
[2010] 9 CLJ & Ors (Third Parties) 729

A Cost Of Re-registering The Said Charges

[9] I do not find this reason as a special circumstance. I agree

with learned counsel for the plaintiffs when he submitted that the
costs of re-registering the said charges would not be substantial and
B that these costs in any event may be recovered during the taxation
of costs process.

The Substratum Of The Appeal

[10] As the claim by the plaintiffs against the second defendant

C primarily concerns the validity of the said charges, should the
second defendant succeed in its appeal it can still enforce the said
charges against the plaintiffs and the said lands. To this end I
disagree with the submission of the second defendant that with the
cancellation of the said charges and the return of the issue
D documents of title to the plaintiffs would render the substratum of
the second defendant’s appeal being lost and the appeal being
academic. If the second defendant really believes that this is the
effect, it would not have raised the issue of needing to re-register
the said charges. There is therefore no merit in the second
E defendant’s argument on this aspect. As for the second defendant’s
fears that the plaintiffs may dispose of the said lands to third
parties, I find that the second defendant has not provided proof of
this event likely to take place.

F Loss Which Cannot Be Compensated

[11] I agree with the submission of learned counsel for the

plaintiffs when he submitted that the second defendant is a financial
institution and is only interested in recovering the monies loaned to
the first defendant. The second defendant’s interest in the said
G
lands is wholly commercial and pecuniary and it does not have any
real interest in the said lands to be capable of suffering from a loss
“which cannot be compensated”. In the event the said charges are
declared valid on appeal, the second defendant may claim against
the plaintiffs personally the value of the said lands and should the
H
value of the said lands fall short of the amount of loan given to the
first defendant, the second defendant may also claim the balance of
the monies owed by the first defendant from the plaintiffs. Thus it
cannot be said that the second defendant would have suffered a loss
which cannot be compensated in these circumstances.
I
730 Current Law Journal [2010] 9 CLJ

[12] Further, the second defendant has not alleged in its affidavits A
that the plaintiffs are financially unsound to repay the second
defendant the value of the said lands in the event of any disposal.
It is insufficient to say that the plaintiff are individuals – see Kosma
Palm Oil (supra), with the implication that they would not be in the
position to compensate the second defendant should the appeal be B
in the second defendant’s favour. Learned counsel for the plaintiffs,
moreover, had referred to the fact that the plaintiffs have other
assets in Malaysia. These assets had been deposed in the plaintiffs’
affidavit in reply affirmed by Wong Sang Eng on 19 June 2001 in
encl. 37. C

[13] I therefore find that the second defendant has failed to prove
a special circumstance under this heading.

Good Chance Of Success In The Appeal

D
[14] Based on the authority of Kosma Palm Oil (supra) and Ming
Ann Holdings Sdn. Bhd. v. Danaharta Urus Sdn. Bhd. [2002] 3 CLJ
380, suffice for me to say that the merits of the second defendant’s
appeal are not a relevant matter for consideration by me in this stay
application. I, however, would like to mention here that even E
though the second defendant has made many averments in its
affidavits that it has good chances of succeeding in its appeal, which
then compelled the plaintiffs to reply and the learned counsel for
the plaintiffs to submit at length on the lack of merits in the
second defendant’s appeal, yet the second defendant’s learned F
counsel in her submission stated that whether or not there are
merits in the appeal as submitted by the plaintiffs learned counsel
are not relevant.

The Plaintiffs Are Singaporeans G

[15] I agree with learned counsel for the plaintiffs when he

submitted that the fact that the plaintiffs are Singaporeans and are
residing in Singapore does not constitute special circumstance. This
is in view of the fact that the plaintiffs had proven to the court’s
H
satisfaction in the second defendant’s application for security for
costs against the plaintiffs, that they have substantial assets within
jurisdiction of this court. Further, Singapore is a country listed in
the First Schedule to the Reciprocal Enforcement of Judgments Act
1958. These facts should reassure the second defendant that should
I
it succeed in its appeal, there is legal recourse against the plaintiffs
nevertheless.
 Abd Rahim Abd Rahman & Ors v. DMD Industries
Sdn Bhd & Ors; Kamariyah Hamdan
[2010] 9 CLJ & Ors (Third Parties) 731

A Conclusion

[16] For the reasons stated above, I find that there are no special
circumstances meriting this application be allowed. I therefore
dismiss this application with costs at RM5,000. The plaintiffs must
B be allowed to enjoy the fruits of their litigation, especially after a
full trial had been conducted.