This was an application by the plaintiffs for an order that a consent order recorded at the Kuala Lumpur High Court ('the civil suit') be set aside; and for consequential orders to be given, namely: (a) that the civil suit be transferred to the High Court in Shah Alam; (b) that the petitions pertaining to bankruptcy and winding-up be set aside; (c) that the money paid to the defendant be deposited in an interest-bearing account or be returned to the plaintiffs.

According to the facts, the defendant (Lian) had instituted the civil suit for specific performance of the purchase by the defendant of shares in Sempurna Cekap Sdn Bhd ('the third plaintiff') and Usaha Sama Timur Barat Sdn Bhd (USTB) ('the fourth plaintiff'). A settlement was negotiated which resulted in the consent order whereby the plaintiffs were made liable to pay the defendant a sum of RM32.1m. Meanwhile the defendant had lodged a police report against Rashid (the first defendant') which initiated a full-scale police investigation against Rashid. The consent order was, notwithstanding, recorded. The defendant subsequently applied to enforce the consent order by filing several winding-up and bankruptcy petitions.

The basis of the plaintiffs' contention was that the consent order contained a term that all reports and complaints made to the relevant authorities would be withdrawn by the defendant and that this amounted to an agreement to stifle prosecution.

Held:

[1] A contract which results in the stifling of a prosecution for a criminal offence may also be illegal and invalid, as it prevents the making of a correct decision as to social and legal policy and the fulfillment of a person's duty to society. Therefore is the purpose of an agreement is to interfere with the proper institution or completion of proceedings to prosecute someone accused of a criminal offence, even if the one who agrees not to prosecute, or to refrain from the continuation with the proceedings obtains no financial or other gain, such agreement will be void. No action may be brought upon it nor may be used by way of a defence in any proceedings.

[1a] On the facts of the case, there was sufficient evidence before the court that one of the considerations of the consent order was that the defendant did not intend to pursue or proceed with the prosecution of the report with regard to cheating and this amounted to stifling prosecution. The defendant clearly did not intend to proceed with the prosecution and was seeking the permission of the authorities not to so proceed with the prosecution. This intention not to proceed with the prosecution on the part of the defendant was part consideration of the entire consent arrangements and therefore this amounted to stifling prosecution.

[2] In relation to the first consequential order applied for, based on s. 23 of the Courts of Judicature Act 1964 and the schedule thereto, the court had the power to transfer the proceedings from one court to another court of co-ordinate jurisdiction.

[3] In relation to the second consequential order applied for, all execution and enforcement proceedings based on the consent order were improper and ought to be set aside in collateral proceedings.

[4] In relation to the third consequential order, the money paid was to be deposited in an interest-bearing account pending the disposal of the civil suit. This was because the money was paid pursuant to an agreement which was found to have been stifling prosecution and that the position was unequal and that the parties were not in pari delicto.

[Consent order set aside; consequential orders allowed.]

JUDGMENT

This is an application by an Originating Summons on the part of the plaintiff for an order:

(1) That the consent order dated 15 October 1996 recorded in Kuala Lumpur High Court Civil Suit No. Dl-22-16-96 be set aside.

(2) That upon and in the event this Honorable Court grants prayer (1) above, the following consequential orders, be granted:

(a) that the Kuala Lumpur High Cou

Click Here to Read the rest of this document