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2020 MarsdenLR 988
COURT OF APPEAL PUTRAJAYA
PACIFIC SANCTUARY HOLDINGS SDN BHD – Appellant
Versus
MASALAND CONSTRUCTION SDN BHD – Respondent
[Civil Appeal No: S-02(IM)-2016-10-2018]
The Court clarified that a Settlement Agreement supersedes earlier judgments, nullifying the grounds for execution after an extended delay without explanation.
Headnote:(A) Rules of Court 2012 – Order 46 – Appeal against leave for execution of judgments after six years – Court's discretion regarding delay in execution – The respondent's appeal against the dismissal of execution leave was considered, highlighting the necessity for a proper explanation for the delay as per Order 46 r 2(1). (Paras 18, 20, 21)
(B) Settlement Agreement – Effect of settlement – The Settlement Agreement dated 28 May 2012 between the parties superseded previous judgments and put an end to the original cause of action, negating the parties' ability to enforce those judgments thereafter. (Paras 21, 27, 30)
Facts of the case: The appeal concerns the respondent's attempt to commence execution on two judgments after six years, alleging breaches of a Settlement Agreement. The Court found that the plaintiff failed to provide sufficient reasons for the delay and that the prior judgments had been extinguished by the Settlement Agreement. The defendant effectively settled the judgment debt according to the terms agreed. (Paras 10, 14, 21)
Findings of Court: The appeal was allowed, and the learned Judicial Commissioner's decision was set aside as erroneous in law, as the judgments in question had been superseded by the Settlement Agreement. (Paras 31)
Issues: Whether the plaintiff could pursue execution after a significant delay following the existence of a Settlement Agreement that had effectively nullified earlier judgments. (Paras 20, 21)
Ratio Decidendi: The Court held that the lapsing of six years without a valid explanation and the existence of a Settlement Agreement extinguishing the judgments led to the conclusion that there were no enforceable claims remaining. (Paras 21, 22)
Result: Appeal allowed with costs.
[1] This is an appeal against the decision of the learned Judicial Commissioner ("learned JC") given at Kota Kinabalu on 20 September 2018 allowing the respondent's appeal against the decision of the Deputy Registrar dated 6 July 2018 dismissing the respondent's application under O 46 r 2 of the Rules of 2012 ('ROC 2012') for leave to commence execution proceedings against the appellant pursuant to a judgment of the High Court granted on 7 January 2011 and the order and judgment of the High Court granted on 28 September 2009 although six years had lapsed since the making of the judgment and order.
[2] After having heard and considered the parties' submission, both oral and written on all the issues ventilated before us, we had allowed the appeal. We now give our reasons.
[3] For the purpose of this judgment, the parties will be referred to as they were in the High Court.
Salient Background Facts
[4] The facts of the case are not in dispute and have been succinctly laid out in the written submission of learned counsel for the appellant which we now reproduce with some modifications. The defendant is a private limited company incorporated in Malaysia on the 13 February 1996 and carries on business of property development.
[5] On the 22 May 1997, the defendant entered into a development agreement with one, Majlis Kebajikan Dan Rekreasi Kakitangan Kerajaan ('MAKSAK'), Negeri Sabah to develop MAKSAK's land held under Town Lease No 017546431 measuring 10.11 hectares more or less situated along the Ceremonial Drive at Likas Bay in the District of Kota Kinabalu, Sabah into a mixed and commercial cum office complex ('the Project Land').
[6] Subsequently, MAKSAK and the defendant mutually agreed to change the proposed development into a proposed KK Mega Mall, 12-storey office complex, 10-storey MAKSAK Hotel, 2-story Civil Service Museum, 2-storey Administrative Blocks and Associated Works. There was subsequently a change of shareholders in the defendant.
[7] After new shareholders had taken over the full control and management of the defendant, they discovered that there was a pending suit filed by the plaintiff against the defendant where a default judgment was entered on 28 September 2009 and for damages to be assessed. This was subsequently done by the learned Senior Assistant Registrar on 7 January 2011 where a sum of RM10,301,791.40 was awarded to the plaintiff. The defendant was not represented during the assessment of damages hearing as the counsel on record had discharged herself from acting for the defendant. The defendant through its new solicitors applied to set aside the default judgment and award of damages but was not successful.
[8] The plaintiff then presented a Winding-Up Petition against the defendant under Companies (Winding-Up) No: 28-54-2011. The defendant had no choice but to seek a compromised settlement with the plaintiff in order not to jeopardise the ongoing project. Following a series of discussions, the defendant and the plaintiff mutually entered into a Settlement Agreement dated 28 May 2012. Under the terms of the said Settlement Agreement, the plaintiff agreed not to enforce any and/or all of its claims under the judgment and to withdraw the winding-up proceedings under Companies (Winding-Up) No: 28-54-2011 in consideration of the defendant agreeing to pay the plaintiff the sum of RM11,627,834.76 by way of cash payment and contra of properties which were being erected on the Project Land.
[9] Pursuant to the said Settlement Agreement, the defendant made cash payment of RM5,000,000.00 plus accrued interest of RM244,494.89 to the plaintiff. That the cash payment was made is an undisputed fact. In addition, the defendant had duly executed the relevant Sale and Purchase Agreements to convey the 10 units of the commercial lots in the defendant's development to the plaintiff. The 10 unit are Lots 242, 243, 244, Lot D44, D45, D46, D47, D146, Lot 290 and 291 respectively. The 10 units were under
