518 Current Law Journal [1999] 2 CLJ

a TAC CONSTRUCTION & TRADING

v.
BENNES ENGINEERING BHD (NO 2)

b HIGH COURT MALAYA, JOHOR BAHRU

ABDUL MALIK ISHAK J
[CIVIL SUIT NO: 22-313-1998]
28 JANUARY 1999
CIVIL PROCEDURE: Execution - Stay - Considerations - Special
c circumstances - Disputing correctness of a judgment - Whether a special
circumstance
CIVIL PROCEDURE: Stay of proceedings - Winding-up proceedings -
Whether prayer for stay of winding-up proceedings may be included in
d application for stay of execution - Whether stay of winding-up proceedings
must be applied for by way of originating summons - Whether improper to
apply for stay of winding-up proceedings in summons-in-chambers seeking stay
of execution - Whether application for stay of winding-up proceedings
tantamount to application for injunctive relief
e The plaintiff, having obtained summary judgment against the defendant for the
sum of RM325,229.16, issued a statutory notice of demand under s. 218(2)(a)
of the Companies Act 1965 (‘the Act’). The defendant then filed a summons-
in-chambers seeking a stay of execution, including a stay of further proceedings
under the plaintiff’s s. 218 notice, pending the disposal of the defendant’s
f appeal to the Court of Appeal. Alternatively, the defendant sought the order
of stay on terms that the defendant deposited the judgment sum together with
interests in an interest-bearing account with the court pending the disposal of
the appeal.
Held:
g
[1] Proceedings in bankruptcy or for the winding-up of a company do not
fall within the ambit of proceedings by way of execution or writs of
execution. The defendant could not be permitted to include a prayer for
a stay of winding-up proceedings in its application for a stay of execution.
h An application for a stay of winding-up proceedings must be made by
way of an originating summons. It was wholly improper for the defendant
to apply by way of a summons-in-chambers for a stay of winding-up
proceedings contemporaneously with an application for a stay of execution.

i
 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 519

[2] The defendant’s purported application for a stay of winding-up proceedings a

was tantamount to an application for injunctive relief as no winding-up
proceedings had been commenced by the plaintiff. And, as more than three
weeks had elapsed since the service of the plaintiff’s statutory notice of
demand, the defendant was not legally entitled and could not be permitted
to apply for injunctive relief against the plaintiff from proceeding with b
any winding-up proceedings in the future. The defendant had failed to
disclose any grounds to support its request for injunctive relief; it had
failed to provide any undertaking as to damages in respect of injunctive
relief.
[3] The court is not a collection agency nor a deposit-taking institution; it is c
not a bank. There are no legal provisions that allow the court to grant
interests in respect of moneys paid into court by virtue of court orders.
[4] Two approaches have been adopted by the courts in respect of applications
for a stay pending appeal; the ‘special circumstances’ approach and the d
‘nugatory approach’. What constitutes a special circumstance is beyond
definition and its parameters are wide; it is the judge who determines,
on the facts, what are special circumstances. Challenging the validity or
correctness of a judgment cannot be construed as a special circumstance
to warrant a stay.
e
[5] The permanent deprivation of moneys paid, or that the defendant would
not be restored to its original position, or difficulty in recovering moneys
from the plaintiff, or that the plaintiff would not be in a position to
reimburse the defendant – did not amount to special circumstances even
if the defendant succeeded on appeal. f

[6] There is no proposition of law that pending an appeal, a defendant is

permitted to refuse to pay a plaintiff moneys under the judgment sum by
reason of the failure of the plaintiff to prove its solvency.
[Defendant’s application dismissed.] g

Case(s) referred to:

A-G v. Albany Hotel Co [1896] 2 Ch 696 (cit)
A-G v. Emerson [1890] 24 QBD 56 (refd)
Allen v. Jambo Holdings Ltd [1980] 2 All ER 502 (cit)
American Cyanamid v. Ethicon [1975] 1 All ER 504 (cit) h
Ban Lee Sdn Bhd v. Renganathan Narayanan [1998] 3 CLJ Supp 426 (refd)
Che Wan Development Sdn Bhd v. Co-operative Central Bank Bhd [1989] 2 CLJ 584
(refd)
Chong Wooi Leong & Ors v. Lebbey Sdn Bhd [1998] 2 CLJ 509 (refd)
Kerajaan Malaysia v. Dato’ Hj Ghani Gilong [1995] 2 CLJ 161 (refd)
Kerajaan Malaysia v. Jasanusa Sdn Bhd [1995] 2 CLJ 701 (cit) i
 520 Current Law Journal [1999] 2 CLJ

a Kong Long Huat Chemicals Sdn Bhd v. Raylee Industries Sdn Bhd [1998] 6 MLJ
330 (refd)
Kumar Jaspal Quah & Aishah v. Wembley Industries Holdings Bhd [1998] 2 CLJ
759 (refd)
Lebbey Sdn Bhd v. Chong Wooi Leong & Anor [1998] 1 CLJ 1072 (refd)
Lee Kuan Yew v. Jeyaretnam JB [1991] 1 MLJ 83 (refd)
b Leong Poh Shee v. Ng Kat Chong [1966] 1 MLJ 86 (refd)
Monk v. Bartram [1891] 1 QB 346 (refd)
Morgan Guaranty Trust Co of New York v. Lian Seng Properties Sdn Bhd [1991] 1
MLJ 96 (cit)
Penang Port Commission v. Kanawangi Superumaniam [1997] 1 CLJ 423 (refd)
Perwira Affin Bank Bhd v. Hj Zakaria Hj Ismail & Ors [1998] 2 CLJ 770 (refd)
c
Re Foursea Construction (M) Sdn Bhd [1998] 3 CLJ 135 (refd)
Re Kong Thai Sawmill Sdn Bhd; Ling Beng Sung v. Kong Thai Sawmill Sdn Bhd &
Ors (No 2) [1976] 1 MLJ 131 (refd)
Re Mohamad Fadzimi Yaakub, ex p United Malayan Banking Corp Bhd [1998] 1
CLJ 783 (foll)
d See Teow Guan & Ors v. Kian Joo Holdings Sdn Bhd & Ors [1997] 2 CLJ 299
(refd)
Sykt Berpakat v. Lim Kai Kok [1983] 1 MLJ 406 (refd)
Tan Lai Wah v. First National Bank of Chicago [1984] 1 MLJ 150 (foll)
The Commissioners For Special Purposes Of The Income Tax v. John Frederick
Pemsel [1891] AC 531 (refd)
e Tneoh Hong Seng v. Dayani Sdn Bhd [1998] 2 CLJ Supp 79 (refd)
Toh Kheng Heng & Anor v. Ahmad Fauzi Mohd Taufek [1994] 1 CLJ 547 (refd)
Wilson v. Church (No 2) [1879] 12 Ch D 454 (refd)
Wu Shu Chen v. Raja Zainal Abidin Raja Hussin & Anor [1996] 2 CLJ 353 (refd)

Legislation referred to:

f Companies Act 1965, ss. 218(1)(e), (2)(a), 222
Courts of Judicature Act 1964, ss. 73, 102
Evidence Act 1950, ss. 2, 114(g)
Rules of the High Court 1980, O. 56 r. 1(4), O. 88 r. 2(1)

Other source(s) referred to:

g Execution Of A Judgment, JF Josling, pp 149-150
Halsbury’s Laws of England, 4th edn, vol 17, p 272, para 455

For the plaintiff - Teh Ann Tong; M/s HY Lee & Hee
For the defendant - Felix Dorairaj; M/s Dorairaj, Low & Teh

h Reported by SA Rahim

i
 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 521

JUDGMENT a

Abdul Malik Ishak J:

Preliminary Issues
Enclosure 36 was a summons in chambers dated 2 September 1998 and filed b
on 2 October 1998 by the defendant seeking the following prayers:
(i) for a stay of execution proceedings, including a stay of further
proceedings under a Notice dated 15th of September 1998 Section
218(2)(a) of the Companies Act, 1965 pending disposal of the
Defendant’s/Applicant’s appeal to the Court of Appeal; c
(ii) alternatively, for a stay of execution proceedings including a stay of
further proceedings under a Notice dated 15th of September 1998 under
Section 218(2)(a) of the Companies Act, 1965 upon the Defendant
depositing the judgment sum together with interest in an interest bearing
account with this Honourable Court pending the disposal of the d
Defendant’s Appeal to the Court of Appeal;

(iii) costs of this Application to be borne by the Defendant;

(iv) such further or other relief as this Honourable Court shall deem fit.

It is interesting to note that the defendant in encl. 36 sought for an order “for e
a stay of execution proceedings, including a stay of further proceedings under
a Notice dated 15th of September 1998 under s. 218(2)(a) of the Companies
Act 1965 ...” The “proceedings under a Notice dated 15 September 1998”
relate to a statutory notice of demand dated 15 September 1998 issued by the
plantiff’s solicitors to the defendant pursuant to s. 218(2)(a) of the Companies f
Act 1965 which was marked as exh. “AC-2” in encl. 35 – the affidavit in
support to encl. 36. For ease of reference that statutory notice of demand is
now reproduced verbatim:
15th September, 1998
g
M/s BENNES ENGINEERING BERHAD,
No. 50, Jalan 10/116B,
Kuchai Entrepreneurs Park,
Jalan Kuchai Lama,
58200 Kuala Lumpur. BY A.R. REGISTERED
h
and/or

Amcorp House, Tingkat 2,

Lot 271, Jalan Dua,
Off Jalan Chan Sow Lin,
55200 Kuala Lumpur. BY A.R. REGISTERED i
 522 Current Law Journal [1999] 2 CLJ

a Dear Sirs,

Re: NOTICE under SECTION 218 (2)(a) of the Companies Act, 1965

We act for Messrs TAC CONSTRUCTION & TRADING of No. 32, Jalan
Harimau Kumbang, Century Garden, 80250 Johor Bahru, Johor Darul Takzim.
b Pursuant to Section 218(2)(a) of the Companies Act, 1965 we demand payment
from you within Twenty-One (21) Days from the date of receipt hereof the
sum of RM311,785.31 being the judgment sum pursuant (to) a Judgment dated
19th August 1998 obtained by our client against you vide Suit No. 22-313-
1998 in the High Court of Malaya at Johor Bahru, particulars whereof are set
c out as follows:

Particulars Amount

(a) Judgment sum RM325,229.16

LESS
(b) Payment RM 20,000.00
d ------------------
Sub-Total b/d RM305,229.16

Page 2

Notice under Section 218 (2)(a) - M/s Bennes Engineering Berhad

e
Sub-Total c/f RM305,229.16

PLUS
(c) Interest on RM305,229.16 at
8% per annum calculated
f from 10/6/98 to 15/9/98
(98 Days) and continuing RM 6,556.15
------------------
Total RM311,785.31
------------------

g TAKE NOTICE that if you fail or neglect to pay the aforesaid sum or secure
or compound for it to the reasonable satisfaction of our client within the
aforesaid period, you shall be deemed to be unable to pay your debts and our
client shall proceed to apply to the Court to wind-up your company.

Dated this 15th September, 1998.

h
Yours faithfully,
Sgd (Illegible)

c.c. 1. Client,
Messrs TAC CONSTRUCTION & TRADING.
i 2. Malayan Banking Berhad,
14th Floor, Menara Mayban,
100, Jalan Tun Perak,
50050 Kuala Lumpur.
 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 523

3. The Pacific Bank Berhad, a

Ground Floor, Wisma Genting,
28, Jalan Sultan Ismail,
50250 Kuala Lumpur.

Page 3
b
Notice under Section 218 (2)(a) – M/s Bennes Engineering Berhad

c.c. 4. Hong Leong Bank Berhad,

Level 5, Wisma Hong Leong,
18, Jalan Perak,
50450 Kuala Lumpur. c
5. EON Bank Berhad,
Corporate Services, Wisma Cyclecarri,
288, Jalan Raja Laut,
50350 Kuala Lumpur.

6. Oriental Bank Berhad, d

Bangunan Oriental Bank,
Kuala Lumpur.

and it is now trite law that the failure to comply with the statutory notice of
demand issued under s. 218(2)(a) of the Companies Act 1965 would entitle
e
the plaintiff to proceed with the winding-up proceedings against the defendant
pursuant to s. 218(1)(e) of the same Act. Inability to pay debts is the most
commonly known and relied upon ground for a winding-up order. Prima facie,
as a creditor the plaintiff has a right to file a petition for winding-up, whatever
the motives of the plaintiff be: Morgan Guaranty Trust Co of New York v.
Lian Seng Properties Sdn Bhd [1991] 1 MLJ 96. At para. 7 of encl. 35, the f
defendant took exception that the statutory notice of demand was extended to
all the defendant’s banks and it was alleged that the judgment sum had been
dishonestly obtained. Of pertinence to note would be the non-compliance of
the defendant to the statutory notice of demand. It can therefore be said that
by applying for an order for a stay of execution proceedings including a stay g
of further proceedings of that statutory notice of demand, the defendant was
clearly contemplating a stay of execution proceedings including the “winding-
up proceedings” against the defendant. Put in another way, the defendant has
construed the “winding-up proceedings” as falling within the ambit of writs
of execution and thereby purportedly included a stay of winding-up proceedings h
in their application for a stay of execution. The very nature of prayer (i) of
encl. 36 gave rise to three main issues:
(1) Whether proceedings in bankruptcy or for the winding-up of a company
fall within the ambit of proceedings by way of execution or writs of
i
execution;
 524 Current Law Journal [1999] 2 CLJ

a (2) If the answer were to be in the negative, the next question to pose would
be whether the defendant is permitted to include a stay of winding-up
proceedings in their application for a stay of execution;
(3) If the answer is also in the negative, the next obvious question to ask
would be whether the defendant’s application in encl. 36 which seeks for
b
an order that “proceedings under a notice dated 15 September 1998 under
s. 218(2)(a) of the Companies Act 1965” is clearly misconceived and
would be struck out in limine by this court.
I will now proceed to examine these issues briefly. To answer the first issue,
c reference to J.F. Josling on “Execution Of A Judgment” at pp. 149 to 150
should be referred to. There the learned author said:
Proceedings in bankruptcy or for the compulsory winding up of a company
are not strictly proceedings by way of execution of a judgment.

d T. Selventhiranathan J in Re Mohamad Fadzimi Yaakub, ex p United Malayan

Banking Corp Bhd [1998] 1 CLJ 783 said at p. 789:
With respect, bankruptcy proceedings do not fall within the ambit of writs of
execution in Order 46: see Vol. 1 of The Supreme Court Practice 1982 para
46/2/1 stating that:
e
The issue of a bankruptcy notice is not a form of execution (Re a Bank-
ruptcy Notice [1898] 1 QB 383 per Chitty L.J. at page 387). Neverthe-
less, in practice the Bankruptcy Court requires the fiat of a Master
(QBD) before a notice will issue on a judgment more than six years
old.
f
However, this point was considered by Edgar Joseph Jr. J. (now FCJ) in Wee
Chow Yong t/a Vienna Music Centre v. Public Finance Bhd [1989] 3 MLJ 508
where his Lordship stated as follows at pages 509 to 511 of the report:

First of all, the bankruptcy notice having been issued on 12 May 1988
g and served upon the judgment debtor on 9 June 1988 although the
judgment debt upon which it was grounded was dated 13 May 1982, it
was said that proceedings in bankruptcy had been commenced more than
six years after judgment had been recovered, without leave of the court
as required under Order 46 rule 2(1) of the Rules of the High Court,
1980. The case of Re v. Gopal, ex p Bank Buruh (M) Bhd [1987] 1
h CLJ 602 was cited in support.

Before I embark upon a consideration of the UK decisions, I would make the

preliminary observation that the issue of a bankruptcy notice is not execution
to enforce a judgment. (See eg Re A Bankruptcy Notice [1898] 1 QB 383 per
Chitty L.J. at page 386). At most, it seems to me that the issue of a bankruptcy
i notice may be regarded as a species of practical enforcement.
 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 525

From these passages, it can safely be concluded that proceedings in bankruptcy a

or for the winding-up of a company do not fall within the ambit of proceedings
by way of execution or writs of execution. This brings me to the second issue
and in answering that issue I say that the defendant is not permitted to include
a stay of winding-up proceedings in their application for a stay of execution.
Consequently, the answer to the third issue would be in the positive in that it b
is clearly misconceived and this court would not permit it and would strike it
down in limine.
In the event my answers to these three issues were wrong, I must now proceed
to the next step of inquiry. Now, if it is argued that the defendant has sought
for an order for stay of execution and an order for stay of winding-up c
proceedings, both these two orders being mutually exclusive to one another
then the following six nagging issues arise for determination:
(a) If the orders sought for by the defendant are distinct and mutually
exclusive of one another, then the question to pose would be whether the d
defendant should apply for an order for stay of the winding-up proceedings
by way of a separate originating summons.
(b) If the answer to question (a) above is in the affirmative, the next question
to pose would be whether it is proper for the defendant to apply by way
of a summons in chambers for an order for stay of proceedings e
contemporaneously with the application for an order for stay of execution?
This would convert the defendant’s application in encl. 36 to be a hybrid
form of application that cannot be permitted or allowed.
(c) The next question to pose would be whether the defendant should only f
apply for a stay of winding-up proceedings after the plaintiff has
commenced winding-up proceedings against the defendant.
(d) If the answer to question (c) above is in the affirmative, then the next
question to pose would be whether the order sought by the defendant for
“stay of further proceedings under a Notice dated 15 September 1998” g
tantamount to an application for injunctive relief bearing in mind the fact
that the plaintiff has not commenced any winding-up proceedings against
the defendant at any time.
(e) Again if the answer to question (d) above is in the affirmative, the next
h
obvious question that comes to mind would be whether the defendant is
legally entitled to apply for an injunctive relief against the plaintiff from
proceeding with any winding-up proceedings in the present case.

i
 526 Current Law Journal [1999] 2 CLJ

a (f) In the final analysis, if the answer to question (e) above is in the negative,
the question that follows would be whether the defendant’s application in
encl. 36 which includes an order for “stay of further proceedings under a
Notice dated 15 September 1998 under s. 218(2)(a) of the Companies Act
1965” is bad in law and cannot be sustained legally.
b
In answering query (a) above, I need to refer to O. 88 r. 2(1) of the Rules of
the High Court 1980 (“RHC”) which says that every application under the
Companies Act 1965 must be made by originating summons. Put in another
way, an application for a stay of winding-up proceedings must be made by
way of an originating summons. This means that in answering query (b) above,
c it is wholly improper for the defendant to apply by way of a summons in
chambers for an order of stay of proceedings contemporaneously with an
application for an order for stay of execution as seen in encl. 36.
Generally, for a stay of winding-up proceedings (where a winding-up order
d has not been made or granted) the Court is duty bound to consider whether
the company’s financial position is “hopelessly insolvent” meaning that the
company is unable to meet the creditors’ current demands and that it would
be against the interest of the commercial world and morality (all rolled up
together) to permit further losses which may never be discharged. In the words
of KL Rekhraj J in Re Foursea Construction (M) Sdn Bhd [1998] 4 MLJ 99,
e
103, 104:
I am also of the view that section 176(1) application gives the court the
discretion only if there are no winding-up proceedings initiated prior to the
application; and if there are such winding-up proceedings, then any such
f application must be made in the very winding-up proceedings by making the
petitioners and the supporting creditors, if any, as parties thereto; and the
presiding judge in the winding-up court would then have before him the wishes
of all the creditors or contributories in coming to some conclusion by either
making the order for arrangement and/or reconstruction and thus granting a
stay under section 222 of the Companies Act; or refuse the application, if
g satisfied that the company’s financial position is one of being a ‘hopelessly
insolvent’, ie it is unable to meet the creditors’ current demands and that it
would be against the interest of the commercial world and morality to permit
further trading losses which may never be discharged; and instead to wind up
the company.

h On the other end of the scale, for a stay of execution proceedings the court
would have to consider whether the applicant has proved special circumstances.
In Wu Shu Chen (sole executrix of the estate of Goh Keng How, deceased) v.
Raja Zainal Abidin bin Raja Hussin & Anor [1996] 2 CLJ 353, 355, I did
say the following and it should rightly apply to the factual matrix of the
i present case:
 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 527

The above quoted provisions give a leeway for me to exercise my judicial a

discretion and that discretion must be exercised within the confines of the law.
A concerted attempt was made to show the incorrectness of my decision but
this surely, with respect, cannot be construed as a special circumstance. Put in
another way, the allegations that there have been misdirections in the judgment,
that the judgment was against the weight of the evidence or that there was no
evidence to support the judgment as advanced by Mr. Robert Lazar, are not b
special circumstances on which this Court will grant a stay (Re Kong Thai
Sawmill (Miri) Sdn. Bhd. [1976] 1 MLJ 131). Even an appeal to the Court of
Appeal as contemplated by the applicant cannot constitute a special
circumstance; what amounts to special circumstances must be something
distinctive and out of the way (Matang Holdings Bhd. & Ors. v. Dato’ Lee
c
San Choon & Ors. [1985] 2 MLJ 406). In the final analysis, what may amount
to special circumstances is certainly a question of fact and it varies from case
to case. Lord Esher MR aptly said in Monk v. Bartram [1891] 1 QB 346 that:

It is impossible to enumerate all the matters that might be considered to

constitute special circumstances; but it may certainly be said that the allega-
d
tions that there has been a misdirection, that the verdict was against the weight
of evidence, or that there was no evidence to support it, are not special
circumstances on which the Court will grant a stay of execution.

Now, in the present case what the defendant should have done was simply to
apply for a stay of winding-up proceedings after the plaintiff has commenced e
winding-up proceedings against the defendant. Section 222 of the Companies
Act 1965 provides the answer; it enacts as follows:
At any time after the presentation of a winding up petition and before a
winding up order has been made, the company or any creditor or contributory
may, where any action or proceeding against the company is pending, apply f
to the Court to stay or restrain further proceedings in the action or proceeding,
and the Court may stay or restrain the proceedings accordingly on such terms
as it thinks fit.

For the foregoing reasons, I would answer query (d) as follows. The
defendant’s purported application in encl. 36 to seek for a “stay of further g
proceedings under a Notice dated 15 September 1998 under s. 218(2)(a) of
the Companies Act 1965” tantamounts to an application for an injunctive relief
since prayer (i) of encl. 36 cannot be construed either as an application for a
stay of execution or for a stay of proceedings as no winding-up proceedings
has been commenced by the plaintiff against the defendant. h
In the present case more than three weeks (21 days) had elapsed since the
service of the statutory notice of demand dated 15 September 1998. Thus, the
defendant is not legally entitled nor permitted to apply for an injunctive relief
against the plaintiff from proceeding with any winding-up proceedings in the
near future. As I said in Kong Long Huat Chemicals Sdn Bhd v. Raylee i
Industries Sdn Bhd [1998] 6 MLJ 330, 339:
 528 Current Law Journal [1999] 2 CLJ

a In my judgment, under section 218(2)(a) of the Companies Act, 1965 if a

debtor does not pay within three weeks (21 days) of service of a notice, the
creditor is entitled to present a petition and that creditor cannot be restrained
by an injunction. At this stage, the debtor cannot say that it is able to pay but
chooses not to: Cornhill Insurance Plc v. Improvement Services Ltd & Ors
[1986] 1 WLR 114.
b
Flowing from these, the answer to query (e) above is in the negative.
In regard to query (f) above, the inclusion in encl. 36 of an order for “a stay
of further proceedings under a Notice dated 15 September 1998 under s.
218(2)(a) of the Companies Act 1965” is, in my judgment, bad in law and
c
cannot be legally sustained. A perusal of encl. 35 – the affidavit in support
of encl. 36, shows beyond doubt that the defendant has completely failed to
disclose any grounds or merits to support the defendant’s request for an
injunctive relief. What is more crucial is the failure on the part of the
defendant to give or provide any undertaking as to damages in encl. 35 in
d respect of the injunctive relief. What is the purpose of the undertaking as to
damages? It is, in my judgment, to vest the court with the jurisdiction to make
the appropriate orders to recompensate the loss suffered by the party when it
is subsequently established that the applicant was not entitled to the injunction
in the first place. Unless such an undertaking is given by the applicant, the
e person wrongly enjoined will hardly have any recourse against the applicant
(Attorney-General v. Albany Hotel Co [1896] 2 Ch 696 at p. 699). On the
strength of the American Cyanamid case [1975] 1 All ER 504 at p. 510, the
ability of the applicant to honour his undertaking is a material factor in the
balance of convenience. But the courts are magnanimous for it will not deny
f the applicant an interlocutory injunction simply because he is of limited
financial means (Allen v. Jambo Holdings Ltd [1980] 2 All ER 502). Be that
as it may, encl. 35 did not show the grounds or merits for the defendant to
justify its request for an order for a stay of winding-up proceedings even if
this court considers that such an application may be made before any winding-
up proceeding has been commenced. At this juncture, it is germane to refer
g
to a passage that appears in the judgment of KL Rekhraj J in Kumar Jaspal
Quah & Aishah (suing as a firm) v. Wembley Industries Holdings Berhad
[1998] 2 AMR 1288, 1290, that reads as follows:
No doubt the court has the discretionary power under section 222 of the said
h Act to restrain such act or proceedings, but only if and provided there are
merits in the application touching on the dispute, as Parliament had given a
creditor, who cannot get paid, an absolute right to presentation of its petition
against the company which not only refuses to pay him, but is in a state of
statutory insolvency after having failed to comply with the statutory notice
under the Act.
i
 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 529

Furthermore, the defendant has completely failed to prove in encl. 35 that if a

a stay of proceedings is not granted, it would be against the interest of the
commercial world and morality. At any rate, the defendant is already in a state
of statutory insolvency by sheer non-compliance with the statutory notice. Thus,
to grant a stay of proceedings would permit the defendant to suffer further
losses that may never be discharged. b
I will now examine prayer (ii) of encl. 36. It is an alternative prayer “for a
stay of execution proceedings including a stay of further proceedings under a
Notice dated 15 September 1998 under s. 218(2)(a) of the Companies Act 1965
upon the defendant depositing the judgment sum together with interest in an
interest bearing account with this Honourable Court pending the disposal of c
the defendant’s appeal to the Court of Appeal.” As I said earlier that the
defendant’s prayer (i) of encl. 36 for “a stay of further proceedings under a
Notice dated 15 September 1998 under s. 218(2)(a) of the Companies Act
1965” has no legal basis whatsoever and the same would equally apply to the
defendant’s alternative prayer (ii) of encl. 36. To confound the matter further, d
the defendant has the audacity to include a prayer that “upon the defendant
depositing the judgment sum together with interest in an interest bearing
account with this Honourable Court.” I must at once say that the courts are
not a collection agency nor a deposit taking institution. It is not a bank. There
are no legal provisions to permit or allow the courts to grant interests in e
respect of any moneys paid into courts by virtue of court orders. In my
judgment, the prayer as envisaged in prayer (ii) of encl. 36 has no legal basis.
It was drafted in bad taste. Abdul Kadir Sulaiman J in Ban Lee Sdn Bhd v.
Renganathan Narayanan [1998] 3 CLJ Supp 426 saw no justification for the
sum ordered to be deposited in court pending the outcome of the applicant’s f
intended appeal. Likewise here there was no justification advanced by the
defendant for the judgment sum to be deposited in this court.
There is a glaring omission on the part of the defendant to specify in their
prayers in encl. 36 the particular court order or judgment where execution
proceedings are to be stayed. Even if this court is minded to grant an order g
for the stay of the execution proceedings, such an order would be ambiguous
and uncertain as the particular order or judgment on which execution
proceedings are intended to be stayed is not specified with exactitude. Viewed
in its correct perspective, encl. 36 should be dismissed in limine with costs
to the plaintiff to be assessed. Bad drafting of encl. 36 puts the defendant in h
a very bad light. Those persons who prepare and are responsible for the
language of encl. 36 should have employed a short and simpler language. In
the context of legislative drafting, Lord Macnaghten once observed in The
Commissioners For Special Purposes Of The Income Tax v. John Frederick
Pemsel [1891] AC 531, 576: i
 530 Current Law Journal [1999] 2 CLJ

a But we are not living in Utopia, where a perfect or ideal lawgiver may be
had very readily.

I have to be critical of encl. 36 as the choice of words was, with respect, not
happily selected. We are not in Utopia but in Malaysia and just like Utopia
precision in language comes easily to those who are trained in the legal field.
b
Merits Of Encl 36
Lest I be accused of an oversight, I will now proceed to consider the
defendant’s application in encl. 36 in a restricted form and focussing my
attention to the stay of execution proceedings of the judgment of this court
c
dated 19 August 1998 pending appeal to the Court of Appeal.
Order 56 r. 1(4) of the RHC provides as follows:
Except so far as the Court may otherwise direct, an appeal under this rule shall
not operate as a stay of the proceedings in which the appeal is brought.
d
Sections 73 and 102 of the Courts of Judicature Act 1964 in clear language
confer on the courts a wide judicial discretion to grant orders for stay of
execution of orders or proceedings. That discretion must be exercised judicially
in accordance with well established principles and dependent on the
e circumstances of each case. No two cases are alike. As Lord Esher said in
Attorney-General v. Emerson [1890] 24 QBD 56, 58 when construing the
English Order L VIII, r. 6:
The real question is, what is the construction of this rule? It says: ‘An appeal
shall not operate as a stay of execution or of proceedings under the decision
f appealed from, except so far as the court appealed from or any judge thereof,
or the Court of Appeal, may order; and no intermediate act or proceeding shall
be invalidated, except so far as the court appealed from may direct’. In all
the rules, the word ‘may’ has been held to mean ‘may or may not’. It has
been held to give a discretion, which is called a judicial discretion, but is still
a discretion.
g
Two approaches have been adopted by the courts in respect of an application
for stay pending appeal. These two approaches have not been incorporated in
the statute books. The first approach would be the special circumstances
approach. The second approach is the nugatory approach. I will now examine
h these two approaches briefly.
Special Circumstances Approach
The starting point would be the old English Court of Appeal decision of Monk
v. Bartram [1891] 1 QB 346 where Lord Esher MR, after a trial, said:
i
 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 531

It was never been the practice in either case to stay execution after the judge a
at the trial has refused to grant it, unless special circumstances are shown to
exist. It is impossible to enumerate all the matters that might be considered to
constitute special circumstances ...

Halsbury’s Laws of England, vol. 17, 4th edn. at p. 272, para. 455 contains a
short interesting passage on the subject matter. It reads as follows: b

The court has an absolute and unfettered discretion as to the granting or

refusing of a stay, and as to the terms upon which it will grant it, and will,
as a rule, only grant a stay if there are special circumstances, which must be
deposed to on affidavit unless the application is made at the hearing.
c
The Federal Court too in two cases adopted the special circumstances approach
as can be seen in Kerajaan Malaysia v. Jasanusa Sdn Bhd [1995] 2 CLJ 701;
[1995] 2 MLJ 105 and Kerajaan Malaysia v. Dato’ Hj. Ghani Gilong [1995]
2 CLJ 161; [1995] 2 MLJ 119. However, what constitutes a special
circumstance is beyond definition. Its parameters are wide. Everything is d
dependent on the facts of each case. Raja Azlan Shah J (as His Majesty then
was) in Leong Poh Shee v. Ng Kat Chong [1966] 1 MLJ 86 made a valiant
attempt at defining those words. This was what His Majesty said:
Special circumstances, as the phrase implies, must be special under the
circumstances as distinguished from ordinary circumstances. It must be e
something exceptional in character, something that exceeds or excels in some
way that which is usual or common.

Of course, it goes without saying that it is the judge that determines, on the
facts, what are special circumstances. There must be materials before a judge
grants a stay. In Kerajaan Malaysia v. Dato’ Hj. Ghani Gilong (supra), the f
Federal Court disagreed with the decision of the High Court judge who had
granted a stay without material. This was what Edgar Joseph Jr. FCJ said at
p. 129 of that case:
We noted, that in the instant appeal, there was no formal application for stay
g
supported by an affidavit affirmed by the taxpayer or his duly authorized agent,
alleging special circumstances to justify the making of the order for stay. In
other words, although the onus was upon the taxpayer to demonstrate special
circumstances justifying a stay, there was no material upon which the judge
could have granted the order for a stay.
h
In Re Kong Thai Sawmill (Miri) Sdn Bhd; Ling Beng Sung v. Kong Thai
Sawmill (Miri) Sdn Bhd & Ors (No: 2) [1976] 1 MLJ 131 FC, Lee Hun Hoe
CJ (Borneo) delivering the judgment of the court spoke of the same subject
matter in this way (see p. 132 of the report):

i
 532 Current Law Journal [1999] 2 CLJ

a It is my view that where stay of execution has previously been refused by

this court after a hearing of an appeal lasting over a week, an application made
to the same court for stay pending an appeal must be supported by special
circumstances. Allegations that there has been misdirections that the verdict of
judgment was against the weight of evidence, or that there was no evidence
to support the verdict or judgment, are not special circumstances on which the
b court will grant the application. See Monk v. Bartram [1891] 1 QB 346. Those
are matters to be decided in the proper forum.

The High Court in Penang in Toh Kheng Heng & Anor v. Ahmad Fauzi bin
Mohd. Taufek [1994] 1 CLJ 547, 554 also applied the special circumstances
approach and this was what the learned judge said:
c
In my view this by itself was not a special circumstance for me to order a
stay of execution. The same argument could be raised in virtually all cases
for possession of land under Order 89 where the occupier thereof has to be
evicted pursuant to a court order and any building erected thereon consequently
demolished. It would therefore lead to a situation where the intention of the
d
legislature in providing for the Order 89 procedure to be adopted to bring
summary proceedings for possession of land would be defeated.

The Nugatory Approach

Simply put, this approach is to prevent an appeal, if successful, nugatory.
e
Cotton LJ in Wilson v. Church (No: 2) [1879] 12 Ch D 454 was concerned
about the dissipation of the fund in that case in the event the appeal was
successful. At p. 458 of the report this was what his Lordship said:
... I am of opinion that we ought not to allow this fund to be parted with by
f the trustees, for this reason: it is to be distributed among a great number of
persons, and it is obvious that there would be very great difficulty in getting
back the money parted with if the House of Lords should be of opinion that
it ought not to be divided amongst the bondholders. They are not actual parties
to the suit, they are very numerous, and they are persons whom it would be
difficult to reach for the purpose of getting back the fund.
g
At p. 459 of the report, Brett L.J. succinctly said:
... the court as a general rule ought to exercise its best discretion in a way so
as not to prevent the appeal, if successful, from being nugatory. That being
the general rule, the next question is whether, if this fund were paid out, the
h appeal, if successful, would be nugatory. Now it seems to me that, looking at
this matter in the view of men of business, one cannot help seeing that if this
fund is paid out it is impossible to say to whom it will be paid. It is quite
true that the payments out will be to persons many of whom will never be
able to be found, it is very possible, and most likely, that several of them will
be abroad; it is most likely that several of them will be in America; and the
i practical result of paying this money out to the different bondholders, or to
the persons who would be holding the bonds at the time, would be that the
fund never could be got back again if the appeal were successful.
 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 533

Recently the Court of Appeal through Gopal Sri Ram JCA adopted the a
nugatory approach in See Teow Guan & Ors v. Kian Joo Holdings Sdn Bhd
& Ors [1995] 3 MLJ 598. There his Lordship said at p. 610 of the report:
In my judgment, the paramount consideration governing an application for a
stay, whether of execution or of proceedings, or, in the case of an application
for some other form of interim preservation of the subject matter of an appeal, b
such as the grant of an injunction or other appropriate relief under section 44(1)
of the Courts of Judicature Act, 1964, is that the appeal to this court, if
successful, should not be rendered nugatory. If upon balancing all the relevant
factors, this court comes to the conclusion that an appeal would be rendered
nugatory without the grant of a stay or other interim preservation order, then,
c
it should normally direct a stay or grant other appropriate interim relief that
has the effect of maintaining the status quo.

Mahadev Shankar (JCA) (as he then was) in Penang Port Commission v.

Kanawangi s/o Superumaniam [1997] 1 CLJ 423; [1996] 3 MLJ 427 adopted
the nugatory approach as his Lordship felt “that there is a real risk that a d
successful appeal could be rendered nugatory” (see p. 434 line “F” of the
report).
In 1998, the Court of Appeal in Chong Wooi Leong & Ors v. Lebbey Sdn
Bhd (No: 2) [1998] 2 MLJ 661 again adopted the nugatory approach. Abu
Mansor Ali JCA had this to say at p. 672 of the report: e

Mr. Sivarasa for the applicants convinced us that no doubt that applicants’ claim
is for compensation nonetheless, if we were not to stay the respondent’s vacant
possession order before the hearing of the applicant’s leave to appeal, it is clear
the applicants’ right to be there would be dissipated and gone before the
appellants can have their several claims assessed and determined and their f
equity would largely have been eroded and destroyed. We were unanimous that
to that extent the applicants’ appeal would be nugatory. How can it not be so
when what is left would be empty fields? We, therefore, allow the applicants’
application for a stay of the Court of Appeal order for vacant possession of
20 January 1998 until the disposal of the applicants’ application for leave to
g
appeal in the Federal Court with costs of this application in the appeal.

Ahmad Fairuz JCA, in the same case echoed the same sentiments at p. 673
of the report:
As to the merits of the application, I am of the view that the applicants’
h
premises should be preserved. The destruction of their premises will, as
contended in para 9 of their affidavit in support cause them to suffer losses,
hardships and difficulties which are irremediable (mengalami kerugian,
penderitaan dan kesusahan yang tidak boleh dibaiki). I find no evidence that
can show that such contention of the applicants as inherently improbable.
Furthermore, the applicants in their counterclaim (see page 121 of the record) i
have, amongst other things, sought a declaration that they have a right to
 534 Current Law Journal [1999] 2 CLJ

a remain on the land in question until their equities are being satisfied in the
form of compensation and damages. If a stay is not granted, then, the very
grant of vacant possession to the respondent will mean the destruction of that
right. From then on, any success in the application for leave to appeal or
eventually in the appeal itself will be meaningless as that right can never be
restored. Thus, a stay is necessary to ensure that that right would be available
b to the applicants in the event that the Federal Court decides their application
for leave to appeal in their favour. Hence, any refusal to grant the stay would
render the application for leave to appeal, or the appeal itself, if the Federal
Court allows the application for leave to appeal, nugatory. For these reasons I
allow the application of the applicants to the extent that the execution of the
order of the High Court Shah Alam shall be stayed forthwith until the disposal
c
of the applicants’ application for leave to appeal. Costs is granted as prayed
in the application.

Of interest to note would be the dissenting judgment of NH Chan JCA in the

same case. At p. 666 his Lordship aptly said:
d
In the instant case, leave has yet to be granted by the Federal Court to appeal
to that court from the judgment of the Court of Appeal. As there is no appeal
which is pending from the Court of Appeal to the Federal Court, there is no
justification for the Court of Appeal to stay execution on its judgment from
which there is no right to appeal. ‘... It is absolutely unheard of to stay
e proceedings upon the judgment of a court from which there is no appeal as
of right’: said Griffith C.J. in the Australian High Court case of Mclaughlin v.
Daily Telegraph Newspaper Co Ltd (No. 1) [1904] 1 CLR 243 at page 283.

Across the causeway in Singapore, Yong Pung How J (as he then was) in
Lee Kuan Yew v. Jeyaratnam JB [1991] 1 MLJ 83 refused the defendant’s
f application for a stay of execution pending appeal and he applied the special
circumstances approach and merely considered the nugatory factor to be an
example of special circumstances. This was what he said at p. 51 of the report:
The court has power to grant a stay, and this is entirely in the discretion of
the court, but the discretion must be exercised in accordance with established
g principles. In the present case, the judgment was not a summary judgment or
a judgment in default, but was a judgment which was given after a full trial,
in which the court even has the benefit of submissions by eminent Queen’s
Counsel on both sides. In such cases in which an unsuccessful defendant has
had a full opportunity to present his case, the court should not deprive a
successful plaintiff of the fruits of his victory pending an appeal, unless the
h
unsuccessful defendant can show some special circumstances to justify the
granting of a stay: Hong Leong Finance Bhd v. Hon Hoi Weng & Ors [1987]
2 MLJ 377. An example of such special circumstances would be a situation
in which it can be shown by affidavit that unless a stay is granted, a successful
appeal could be nugatory. (Emphasis added).
i
Having laid out these general principles, I will now proceed to the heart of
the matter. I will endeavour to examine all the points raised by the defendant
in their attempt to seek a stay, not in its order of merit.
 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 535

Appeal Does Not Operate Automatically As A Stay Of Execution a

In exh. “AC1” of encl. 35, the defendant exhibited a notice of appeal to the
Court of Appeal against my decision delivered on 1 September 1998 and
argued that that would be a special circumstance to grant a stay. I beg to
disagree. In Wu Shu Chen (Sole Executrix of the Estate Of Goh Keng How,
b
Deceased) v. Raja Zainal Abidin Bin Raja Hussin & Anor [1996] 2 CLJ 353
at p. 355, I said:
It is now trite that an appeal does not operate automatically as a stay of
execution. This is clearly borne out by both section 73 of the Courts of
Judicature Act, 1964 and rule 13 of the Rules of the Court of Appeal, 1994. c
Section 73 of the Courts of Judicature Act, 1964 provides that:

An appeal shall not operate as a stay of execution or of proceedings

under the decision appealed from unless the court below or the Court
of Appeal so orders and no intermediate act or proceeding shall be
invalidated except so far as the Court of Appeal may direct. d
Rule 13 of the Rules of the Court of Appeal 1994 provides that:

An appeal shall not operate as a stay of execution or of proceedings

under the decision appealed from unless the High Court or the Court
so orders and no intermediate act or proceeding shall be invalidated
except so far as the Court may direct. e

NH Chan J (now JCA) in Che Wan Development Sdn Bhd v. Cooperative

Central Bank Bhd [1989] 3 MLJ 40, 42 succintly said:
An appeal does not operate as a stay of execution. See section 73 of the Courts
of Judicature Act, 1964 (Rev 1972) which reads: f

73. An appeal shall not operate as a stay of execution or of proceedings under

the decision appealed from unless the court below or the Supreme Court
so orders and no intermediate act or proceeding shall be invalidated except
so far as the Supreme Court may direct.
g
This is similar to the provisions of the English RSC Order 59, rule 13 (1).
See also 17 Halsbury’s Laws of England (4th Edn) para 454 at page 272 which
reads:

Except so far as the court below or the Court of Appeal may otherwise
direct, an appeal does not operate as a stay of execution or of proceedings h
under the decision of the court below, and no intermediate act or
proceeding is invalidated by an appeal.

Alauddin Mohd. Sheriff J in Perwira Affin Bank Bhd v. Hj. Zakaria Hj. Ismail
& Ors [1998] 2 CLJ 770, 772 was also of the view, quite rightly, that an
appeal did not operate as a stay of execution. i
 536 Current Law Journal [1999] 2 CLJ

a On affidavit evidence, the plaintiff responded by filing encl. 42 – an affidavit

in reply of Teh Ann Chung that was affirmed on 16 October 1998 and filed
on 21 October 1998. At para. 4(a) of encl. 42 it was deposed that the filing
of a notice of appeal would not operate, automatically, as a stay of execution.
It was indeed a wise move for the plaintiff to depose in this direction and in
b this manner.
Validity Or Correctness Of Judgment Cannot Be Considered As Special
Circumstances
It was argued by the defendant that the judgment of this court that was handed
c down on 1 September 1998 was challenged as to its correctness or validity.
It was contended that the plaintiff did not take into account a sum of
RM20,000 that was paid by the defendant. To be more specific in encl. 9 at
para. 8, the defendant averred that they had paid all the sums due to the
plaintiff amounting to RM185,000 – which included a payment of RM20,000
d on 15 May 1998, and consequently there was no further sum due to the
plaintiff. In response in encl. 11 of para. 5.2.1, the plaintiff deposed that the
averment in encl. 9 at para. 8 was incorrect as the plaintiff had received a
further payment by way of a cheque dated 20 May 1998 for the sum of
RM20,000. The plaintiff even went to the extent of saying that the said cheque
was duly honoured only on 29 May 1998. The plaintiff sought to explain that
e
their solicitors had issued a notice of demand (exh. “TAC5” of encl. 7) against
the defendant and because of that the cheque dated 20 May 1998 for
RM20,000 was not reflected in that notice of demand. The plaintiff also
deposed that by virtue of the contents of exh. “TAC5” of encl. 7, the last
payment through cheque dated 20 May 1998 for the sum of RM20,000 by
f the defendant to the plaintiff was accepted on a without prejudice basis by
the plaintiff. Put in another light, it was the plaintiff’s stand as reflected in
exh. “TAC5” of encl. 7 that any part of payment received by the plaintiff
thereafter shall be accepted without prejudice to the plaintiff’s claim for the
debt as stated in that notice of demand. It must be emphasised that all these
g averments were not disputed nor challenged by the defendant. Thus, what was
averred to in para. 5.2.1 of encl. 11 remained good and unchallenged and its
truthfulness intact. Mr. Felix Dorairaj for the defendant had the audacity to
argue that the plaintiff had “lied” to this court and that the plaintiff’s claim
was “surely fraudulent” and that the judgment sum was “dishonestly obtained”.
h These are strong, harsh words employed, no doubt, to “hoodwink” this court.
I must at once say that deception does not come easy and this court cannot
be deceived by anyone. The affidavit evidence bears testimony to the fact that
the plaintiff was entitled to the judgment sum. It is germane to mention that
the defendant did not raise the issues of “fraudulent” or “dishonest” in their
i earlier affidavits. When the going got tough, the defendant became more
 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 537

cunning. It was only in enclosure 35 – the affidavit in support of encl. 36, a

that the defendant raised for the very first time the issues of “fraudulent” and
“dishonesty”. The fact of the matter was this. That the defendant was
completely ignorant of the payment of RM20,000 by way of a cheque dated
20 May 1998. It was the plaintiff who had disclosed this to the court. At any
rate, it would be ideal to refer to exh. “AC3” of encl. 35 where the plaintiff’s b
counsel in seeking payment for the judgment sum had deducted the sum of
RM20,000 which was already paid by the defendant and the plaintiff did not
seek to obtain any “double claim” for it. Furthermore, a perusal of the
statement of claim would indicate that the plaintiff’s claim was strictly based
in accordance with the notice of demand as exemplified in exh. “TAC5” of c
encl. 7.
I am constrained to hold that challenging the validity or correctness of a
judgment cannot be construed as special circumstances to warrant a stay. As
Alauddin Mohd. Sheriff J said in Perwira Affin Bank Bhd v. Hj Zakaria Hj
Ismail & Ors (supra) at p. 774 of the report: d

The applicants say there are merits in their appeal. I see no evidence in the
affidavit to support this contention. The issues raised by the fourth defendant
in his affidavit are substantially the same as those raised in the affidavit in
opposition to the application for an order for sale by the respondent. I had
earlier considered these issues at great length. It may well be that merits of e
the appeal is a relevant consideration but generally merits, strong grounds for
appeal, correctness or otherwise of judgments are not special circumstances (See
Atkins v. GW Ry [1986] 2 TLR 400).

In an illuminating judgment, NH Chan J (now JCA) said in Che Wan

Development Sdn Bhd v. Co-operative Central Bank Bhd (supra), particularly f
at p. 43, which must be considered to be good law:
Similarly, in the case of a money judgment, where Order 47 rule 1 (1) applies,
the court is not to have regard to the validity or correctness of the judgment
but only to concern itself with the special circumstances which are relevant to
the enforcement of the judgment; see per Lord Denning MR in Trustees Ltd g
v. Darwen (Successors) Ltd [1969] 2 QB 295 at page 302:

Mr. Lipfriend raised a further point. He said that under RSC Order 47
rule 1, there is power, in the case of a writ of fieri facias, or elegit, to
stay [execution] proceedings if there are special circumstances which
render it inexpedient to enforce the judgment or in case the applicant h
is unable from any cause to pay the money. ... The circumstances there
again are circumstances which go to the enforcement of the judgment:
and not those which go to its validity or correctness.

i
 538 Current Law Journal [1999] 2 CLJ

a See also 17 Halsbury’s Laws of England (4th Edn) [1976] para 451 at page
270 which reads: ‘The special circumstances which entitle the court to stay
execution of a money judgment are circumstances which go to the enforcement
of the judgment and not those which go to its validity or correctness.’ And
the case which is cited in the footnotes in support of this rule is TC Trustees
Ltd v. FS Darwen Ltd [1969] 2 QB 295.
b
In other words, grounds affecting the validity or correctness of the judgment
or order appealed from are not special circumstances. This is because, as was
said by Lord Esher MR (at page 400) in Atkins v. GW Ry [1886] 2 TLR 400,
‘strong grounds for an appeal is no reason for a stay of execution, for no one
ought to appeal without strong grounds for doing so’, or, as was put by Lord
c Denning MR (at page 302) in Trustees Ltd v. Darwen [1969] 2 QB 295, those
are matters which ‘must be sought in the action itself, before judgment is given.
It is too late to come after judgment. ... It is not permissible to renew it again
on an application for a stay of execution’.

Next, it was argued that the plaintiff had wilfully misled this court into
d granting the judgment for the plaintiff and for that reason the judgment was
tainted with impropriety. Indeed these were serious allegations. It was a
mischievous submission calculated to cast aspersion on the intergrity of this
court. It was a contemptuous submission. It insults the intelligence of this
court. As I said in Wu Shu Chen (Sole Executrix Of The Estate Of Goh Keng
e How, Deceased) v. Raja Zainal Abidin bin Raja Hussin & Anor (supra),
challenges against the incorrectness of the court’s decisions in whatever forms
cannot be considered as special circumstances.
Unethical Means To Extract Judgment Sum Cannot Be Considered As
f
Special Circumstances
It was argued that the plaintiff employed unethical means by copying the notice
under s. 218(2)(a) of the Companies Act 1965 as reflected in exh. “AC2” of
encl. 35 to all the defendant’s banks.

g That act was said to amount to “blackmailing” the defendant. But one must
not forget that by letter dated 7 September 1998 as reflected in exh. “AC3”
of encl. 35, the plaintiff gave the defendant a grace period of seven days from
the date of receipt to pay the judgment sum which the defendant was ordered
to pay by this court. The defendant admitted receiving exh. “AC3” of encl.
35 but deliberately failed, ignored and/or refused to abide by the judgment of
h
this court. The defendant too did not dispute that exh. “AC2” of encl. 35 was
issued after the expiry of the grace period as stipulated in exh. “AC3” of encl.
35. The defendant too did not dispute that at the time when exh. “AC2” of
encl. 35 was issued, the defendant had not taken out any injunctive relief to
restrain the plaintiff from commencing to take steps to wind-up the defendant.
i Clearly therefore from these short narratives, it was the defendant’s failure to
 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 539

abide by the judgment of this court that had caused the plaintiff to pursue its a
enforcement remedies against the defendant. The defendant was the author of
their own downfall. In fact it would be a correct assertion to say that the
defendant was “highly unethical” by persistently and deliberately refusing to
obey the order of this court. In law, there are no legal impediments for the
plaintiff to issue exh. “AC2” of encl. 35 to all the defendant’s banks in the b
manner in which the plaintiff did. At any rate, the conduct of the plaintiff
was not unethical and even if it was so, it cannot be construed as a special
circumstance to warrant a stay.
Introduction Of New Documents – An Afterthought, Are Not Special
Circumstances c

New documents were introduced for the very first time in encl. 35. These
documents were not introduced earlier by the defendant when the latter was
challenging the plaintiff’s application for summary judgment. The defendant
explained that these new documents were not available then. If that was so, d
why didn’t the defendant seek an adjournment of the hearing of the plaintiff’s
application for summary judgment to enable the defendant to secure these
documents and adduced the same? The defendant too had the audacity to say
that they would seek leave from the Court of Appeal to adduce these fresh
and new documentary evidences on the grounds that they were not available
e
at the material time. These new documentary evidences sought to show that
the judgment sums were excessive, contrary or against the weight of the
available evidence. The Privy Council in Tan Lai Wah v. First National Bank
of Chicago [1984] 1 MLJ 150, rejected the plea of non est factum that was
raised by the appellant for the very first time some 15 months after the defence
had originally been filed. In a short judgment this was what Lord Diplock f
said at p. 150:
This is an appeal brought by a Chinese lady who had been a successful land
broker for 17/18 years. The appeal is against a judgment for moneys payable
under a guarantee of an overdraft entered into as long ago as 1974. The only
g
defence persisted in before their Lordships was one of non est factum to the
guarantee which was signed. It was first raised some 15 months after the
defence had originally been filed. The learned trial judge surprisingly upheld
that defence. His judgment was reversed by the Court of Appeal for reasons
with which their Lordships can find no fault. Their Lordships would merely
refer to the last sentence of the Court of Appeal’s judgment on this particular h
issue:-

It is also our view that having regard to her long experience as a land
broker and other spheres of business as previously set out – factors
which the learned trial judge appeared to have not considered – her mere
assertion that she thought the document she signed was one guaranteeing i
her a half share in [that parcel of land] was unbelievable.
 540 Current Law Journal [1999] 2 CLJ

a While paying a deserved tribute to the ingenious and seductive arguments

advanced by Mr. Beveridge in an endeavour to uphold the judgment of the
trial judge, their Lordships must nevertheless dismiss the appeal with costs.

Applying Tan Lai Wah, this court too must reject those new documents as it
was too late in the day for the defendant to rely on them. As the saying goes,
b the court will only assist the vigilant and not the indolent.
Even if I am prepared to extend the court’s indulgence and generosity to
consider these new documents notwithstanding the fact that these new
documents were improperly adduced, I cannot help but feel constrained to
c make the following brief observations:
(1) There was no documentary proof pertaining to the measurements and
drawings of the plaintiff’s works which had been completed as the
defendant had earlier claimed that this was required before valuation could
be done.
d
(2) The purported valuation of the plaintiff’s works as seen in exh. “AC5”
of encl. 35 was not dated, not certified by the consultant quantity
surveyors and it did not state the basis upon which the valuation sums
were derived. Yet, in the same breath the defendant had earlier claimed
that the works must be verified by way of re-measurements and the
e
drawings to be done by the consultant quantity surveyors before the
amount due in respect of the works duly completed could be certified.
(3) In para. 8(iv) of encl. 35, the defendant deposed that various sums that
have purportedly been valued and certified relate to those amounts under
f the contract between the defendant and the employer (Giant Cash & Carry
Sdn Bhd). Furthermore, in para. 8(vi) of encl. 35, the defendant deposed
that from the sums that have already been valued and certified in exh.
“AC5” of encl. 35, the plaintiff’s entitlements or claims were said to be
those as set out in exh. “AC7” of encl. 35. But a perusal of exh. “AC7”
g of encl. 35 would show that the figures and amounts reflected therein were
not certified at all by the consultant quantity surveyor. What is clear is
this. That the alleged plaintiff’s entitlements have been tabulated and
derived arbitrarily by the defendant themselves. Then there was also no
verification as to how the purported rates have been arrived at. The figures
and the amounts seemed to have been snapped from the air.
h
These are some of the observations germane to the occasion and when taken
in its proper perspectives, the defendant had no leg to stand on.

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 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 541

Permanent Deprivation Of Moneys Paid Or Defendant Would Not Be a

Restored To Its Original Position Or Difficulty Of Recovering Moneys From
Plaintiff Or Defendant Would Not Be In The Position To Re-imburse The
Defendant Are Not Special Circumstances Even If The Defendant Succeeds
On Appeal
b
I have taken the liberty of itemising and considering all these points together
as they are related to one another. It was the defendant’s contention that a
stay ought to be granted as there was every possibility that the plaintiff may
not be in a position to return the moneys under the judgment sum. The answers
to all these points can readily be gleaned from several authorities. Suffice for
this exercise, that reference to some of them will now be made. For a start is c
the case of Syarikat Berpakat v. Lim Kai Kok [1983] 1 MLJ 406 where at p.
407, Hashim Yeop Sani J (as he then was) said:
From the affidavit of the applicant here it seems clear that the sole ground
relied on as special circumstances is to be found in paragraph 5 of the affidavit
d
which reads as follows:

I believe, it is imperative that a stay be granted as otherwise it will cause

a permanent deprivation of money if the Plaintiff firm succeeds in the
Appeal as there are merits in the Appeal in that there are points of law
and facts for arguments.
e
Based on past precedents and authorities this ground cannot be regarded as
special circumstances to justify an order for stay. In my opinion the application
here was misconceived and I accordingly dismissed the Motion with costs.

Then it would be the case of Tneoh Hong Seng @ Teoh Hong Seng v. Dayani
Sdn Bhd [1998] 2 AMR 1066 where at p. 1074, Mohd. Hishamudin Mohd. f
Yunus J said:
I do, however, appreciate that if stay is not granted then in the event the
defendant wins the appeal it would have been deprived of the opportunity of
selling the shophouse to some other person at a higher price. But such a loss
g
is purely a monetary loss and could be compensated or made good: the Court
of Appeal, in the event it allows the appeal, can order the plaintiff to pay the
defendant the difference in price.

Next, Abdul Kadir Sulaiman J in Ban Lee Sdn Bhd v. Renganathan Narayanan
[1998] 3 CLJ Supp 425, especially at p. 427 to p. 428 succinctly said: h
It would be a sufficient ground for the stay of execution if the likelihood of
an appeal, if successful, being rendered nugatory: See Teow Guan & Ors. v.
Kian Joo Holdings Sdn Bhd & Ors [1997] 2 CLJ 299; [1995] 3 MLJ 598 CA.
By nugatory it means that it would deprive the applicant in this case of the
fruits if the result of the appeal is in his favour. In exercising my discretion i
in the nature of this application, it is incumbent upon me to consider whether
 542 Current Law Journal [1999] 2 CLJ

a if the applicant succeeds in its appeal against the order of the High Court, will
it make the result useless and academic in the hand of the applicant? Will it
in the true sense be deprived of the fruits of its litigation? The answers must
be in the negative because the subject matter involved here is money or
money’s worth. It may be difficult for the applicant to recover the amount from
the respondent but that is not sufficient to construe the result of the appeal as
b becoming nugatory. Legal remedies will be available to the applicant against
the respondent to recover the amount. On the other hand, the respondent should
not be deprived the fruits of his litigation for the reason that the applicant is
unhappy with the decision of the High Court allowing the appeal of the
respondent. The difficulty in the amount of money is not a special circumstance
to justify the grant of this application as being nugatory. I also did not see
c
the justification for the sum ordered to be deposited in court pending the
outcome of the applicant’s intended appeal. On the merit of the intended appeal
of the applicant to the Court of Appeal, apart from saying so in its affidavit
in support and the submissions made by its counsel, I have not been shown
in what way that there is merit at all. On the contrary, by granting this
d application of the applicant, more hardship and injustice would be caused to
the respondent.

Finally, in Lebbey Sdn Bhd v. Chong Wooi Leong & Anor [1998] 1 AMR
506. Abdul Wahab Patail J said at p. 514 of the report:

e The defendant’s limited financial resources is a matter to take note of, but the
court cannot deny the defendants, the exercise of a discretion of the court which
would otherwise have been available to persons with financial resources. Justice
should not depend on a person’s means.

I am in accord with the views of my brother judges and I apply the principles
f enunciated therein vigorously to the factual matrix of the present case.
Undaunted the defendant argued that the plaintiff had omitted to produce proof
of its financial standing and this court should conclude that the plaintiff was
insolvent. But the onus was on the defendant’s part, all along, to show to this
court that the plaintiff was insolvent. I did say something to that effect in the
g case of Wu Shu Chen (Sole Executrix Of The Estate Of Goh Keng How,
Deceased) v. Raja Zainal Abidin bin Raja Hussin & Anor [1996] 2 CLJ 353
especially at p. 356:
I venture to say that the applicant failed to establish by affidavit evidence that
Raja Zainal Abidin is insolvent and therefore would not be in a position to
h
reimburse RM25,892,000.00 and to pay damages in the event the applicant
succeeds in her appeal. Unless evidence is adduced to the contrary, I must
assume that Raja Zainal Abidin is not insolvent and this assumption is clearly
borne out by his affidavit in enclosure 45.

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 TAC Construction & Trading v. Bennes Engineering
[1999] 2 CLJ Bhd (No 2) 543

Reliance was placed by the defendant’s counsel on s. 114(g) of the Evidence a

Act 1950 to argue that evidence which could be and is not produced would
if produced be unfavourable to the person who withholds it. So, since the
plaintiff withhold that evidence it must be construed against them, so ran the
submission of the defendant’s counsel. I am constrained to hold that the
Evidence Act 1950 cannot be applied to affidavit evidence and this is explicitly b
borne out in s. 2 of the Act itself. Section 2 of the Evidence Act 1950 enacts
as follows:
This Act shall apply to all judicial proceedings in or before any court, but not
to affidavits presented to any court or officer nor to proceedings before an
arbitrator. c

At any rate the plaintiff has gone one step ahead. In encl. 42 of para. 5(r),
the plaintiff has in a way showed its solvency. The plaintiff had shown that
despite being wilfully deprived of the moneys due under the judgment sum
that came up to more than RM300,000, the plaintiff by affidavit evidence had
d
demonstrated that it had not faced any difficulty in carrying on its business.
On this point, there was no contradiction by the defendant by way of affidavit
evidence. But it was argued by the defendant that since the plaintiff was able
to continue its business without the benefit of the judgment sum, then the
defendant need not pay that judgment sum as the plaintiff would not be
prejudiced. This argument was without merit. There is no proposition of law e
to say that pending an appeal the defendant is permitted to refuse to pay the
plaintiff moneys under the judgment sum by reason of the failure of the
plaintiff to prove its solvency. In any event, the plaintiff here has shown its
solvency in encl. 42 of para. 5(r). The approach adopted by Abdul Kadir
Sulaiman J in Ban Lee Sdn Bhd v. Renganathan Narayanan (supra) in regard f
to an application for stay of execution concerning money judgment as
reproduced somewhere in this judgment serves as a useful guideline to follow.
For the reasons adumbrated above, I dismissed encl. 36 forthwith. Costs to
be given to the plaintiff and it must be assessed.
g

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 544 Current Law Journal [1999] 2 CLJ

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