A garnishee must comply with court orders despite having a right of set-off; non-compliance may lead to loss of that right.

Suriyadi Halim Omar FCJ:

[1] The RHB Bank Berhad ('respondent') had granted housing loan and overdraft banking facilities ('the facilities') to one Mohamad Najib bin Mohamad Amin ('the JD'), and, as part of the securities, monies in six fixed deposit accounts ('the FD Accounts') were pledged with the respondent in a form of a letter of set-off dated 14 June 1999 ('the letter of set-off').

[2] In 2000 the Malaysian International Trading Corporation Sdn Bhd ('the appellant') sued the JD in the Singapore High Court in relation to a massive fraud committed by the JD against the appellant. After a full trial the appellant on 30 August 2002 obtained judgment in the sum of US$79 million (about RM350 million then) against the JD. The Singapore High Court also made a finding of fact that the monies held by the respondent were held on trust for the appellant. For easy reference that US$79 million judgment will be referred to as the Singapore judgment.

[3] The Singapore judgment was subsequently registered by the appellant in the Kuala Lumpur High Court under the Reciprocal Enforcement of Judgments Act 1958 on 10 March 2003.

[4] The appellant being the judgment creditor (JC), filed an ex parte application (encl 9) naming the respondent as the garnishee, for an order that all monies owed by the respondent to the JD be garnished and used for payment of the debt due under the Singapore judgment on 12 November 2003 pursuant to O 49 of the Rules of the High 1980 (O 49 RHC).

[5] Without any opposition at this ex parte hearing the appellant was successful and an order to show cause (or colloquially called a Garnishment Order Nisi) was granted on 14 January 2004.

[6] For easy reference, the respondent who is drawn into the enforcement process is referred to as the garnishee whilst the judgment creditor is interchangeably referred to as the garnishor. The garnishor here is the appellant. The judgment debtor, who is not involved in this appeal, is the abovementioned Mohamad Najib bin Mohamad Amin (JD).

[7] The Garnishment Order Nisi was served on the respondent on 21 January 2004, but despite that service on the respondent, in exercise of its right of setoff, proceeded to uplift the FD Accounts on 10 March 2004 to pay the JD's debt due to the respondent. The respondent began with the issuance of a letter of demand to the JD on 16 February 2004. The respondent also disposed the remaining charged securities of the JD. After realising the securities, only RM67,664.27 was left, ie the only sum conceded by the respondent to be subject to the Garnishment Order Nisi, eventually to be paid to the appellant in compliance with the High Court order of encl 164. With that last refund of RM67,664.27 to the JD, the latter and the respondent owed each other nothing.

[8] Naturally interested in the FD Accounts, the JD in a separate action filed an action to set aside parts of the Garnishment Order Nisi on 3 June 2004 but was dismissed on 15 November 2005 by the SAR. The JD filed an appeal but failed before Lau Bee Lan J on 20 October 2009. As far as the JD was concerned the matter ended on 20 October 2009. It is noted that in this JD's application or subsequent appeal the respondent never intervened in the proceedings.

[9] The Senior Assistant Registrar (the SAR) granted the Garnishment Order Absolute (order absolute) on 8 October 2013, though having granted to the appellant the Garnishment Order Nisi way back on 14 January 2004.

[10] Being dissatisfied with the 8 October 2013 order absolute of the SAR, the respondent filed