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2021 MarsdenLR 2720
HIGH COURT MALAYA JOHOR BAHRU
UNITED OVERSEAS BANK (CHINA) LIMITED CHENGDU BRANCH – Appellant
Versus
SIOW KWANG JOON @ SIOW KWONG SHANG – Respondent
[Civil Suit No: JA-22NCC-22-04-2019]
The existence of special circumstances is required to justify a stay of execution pending appeal, particularly under the context of foreign judgment recovery difficulties.
Headnote:(A) Courts of Judicature Act 1964 – Section 73 – Rules of 2012 – Order 55 r 16 – Application for stay of execution of judgment – Discretion of court to grant stay depends on presence of special circumstances – The court must consider the successful party's entitlement to the fruits of litigation – Previous decisions including Kosma Palm Oil Mill Sdn Bhd & Ors v. Koperasi Serbausaha Makmur Bhd provide guidance on special circumstances – Appellant established a real risk of non-recovery of judgment debt from a foreign plaintiff, justifying stay. (Paras 6-17)
Facts of the case: The applicant sought a stay of execution of a judgment obtained by the plaintiff, a foreign financial institution, concerning a default on financing facilities provided to a Chinese company. The court had to determine if special circumstances existed justifying the stay of execution.
Findings of Court: The court found the applicant demonstrated special circumstances based on the likelihood of non-recovery from a foreign entity.
Issues: Whether special circumstances existed to justify a stay of execution pending appeal.
Ratio Decidendi: The court ruled that the lack of a reciprocal enforcement agreement and the potential difficulty in recovery of judgment funds constituted special circumstances warranting a stay of execution.
Result: Application granted with costs.
JUDGMENT
Introduction
[1] This is an application ("this Application") in encl 95 by the defendant for a stay of execution of the judgment obtained by the plaintiff in June 2020.
The Background Facts
[2] The plaintiff, a licensed Chinese financial institution, by way of two letters of offer dated 27 December 2012 and 9 May 2014, granted financing facilities to a Chinese company, Foh Chong (Guangxi) Chemical Co Ltd ("FCGC"), for an amount up to RMB92.5 million ("FCGC Facilities").
[3] The defendant is a director of FCGC, and has an interest in it through his company, Foh Chong & Sons Sdn Bhd, where he is a shareholder. The defendant executed a personal guarantee dated 9 May 2014 ("the Guarantee") to secure repayment of the FCGC Facilities. FCGC defaulted in the FCGC Facilities since 31 January 2015, and in February 2019, the plaintiff called on the defendant's obligation under the Guarantee.
[4] The plaintiff filed the Writ and Statement of Claim on 30 April 2019, and subsequently applied for summary judgment. On 25 June 2020, an order for summary judgment was made against the defendant for the amount owing pursuant to the FCGC Facilities. The defendant filed an appeal against that decision ("the Appeal").
[5] On 12 August 2020, the defendant filed this Application, which was allowed for the following reasons.
The Law
[6] The starting point for any application for stay is s 73 of the Courts of Judicature Act 1964 and O 55 r 16 of the Rules of 2012 . The provisions read:
Section 73 - Appeal not to operate as stay of execution
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.
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Order 55 - Appeals to high Court from subordinate courts Rule 16 - Stay of execution
(1) An appeal shall not operate as a stay of execution under the decision appealed against...
(2) The Court appealed from or the High Court may grant an order of stay of execution on such terms as it thinks fit
[Emphasis Added]
[7] This was restated in the landmark case of Kosma Palm Oil Mill Sdn Bhd & Ors v. Koperasi Serbausaha Makmur Bhd, ("Kosma Palm Oil").
[8] This is an important curtain raiser to any application for stay as it is not an automatic right, but rather is left to the discretion of the Court, which must have in mind the right of the successful party not to be deprived of its fruits of litigation. Reference on this point is made to Kosma Palm Oil, Serangoon Garden Estate Ltd v. Ang Keng , , and Leong Poh Shee v. Ng Kat Chong ; .
[9] The Court, therefore, will not deprive a successful party of the fruits of his litigation until an appeal is determined, unless the unsuccessful party can show special circumstances to justify it. What may amount to special circumstances is a question of fact in each case.
[10] In order for the Court to exercise its judicial discretion to grant a stay of execution, the defendant has to demonstrate the existence of special circumstances. This was clarified by the Federal Court Case of Kosma Palm Oil, which held that:
It is therefore clear beyond doubt that there are many factors that may constitute special circumstances and the fact that an appeal would be rendered nugatory if stay was refused is the most common one. It is an example of special circumstances. In other words special circumstances is the genus of which nugatoriness is a species. If it has been shown that an appeal would be rendered nugatory if stay was refused what it means is that a special circumstance has been established. Thus they cannot be treated as separate heads and one cannot be an alternative to the other. Neither can one be accepted or rejected in favour of the other as they are inter-related.
...
The onus is on the applicants to demonstrate the existence of special circumstances to justify the grant of a stay of execution. The reasons
