To obtain a stay of a winding-up order, applicants must prove special circumstances; mere potential for appeal success is insufficient.

Table of Content
1. special circumstances must be shown to justify stay, beyond nugatoriness. (Para 34 , 35 , 39)
2. impact on shareholders and their inability to unite determines winding up. (Para 41 , 42 , 44)
3. impacts of winding-up on shareholders emphasized. (Para 47)

"The weight of authorities appears to me to say that the special circumstances must be special, not ordinary, common or usual circumstances and that go to the execution of the judgment and not to the validity or correctness of the judgment (or merits of the appeal) ..."

Burden And Manner Of Proving "Special Circumstances"

[34] The burden of proving the existence of 'special circumstances' is on the applicants as mentioned by the Federal Court in the case of Kosma Palm Oil Mill Sdn Bhd & Ors. Here the Federal Court held that (emphasis added):

"... The onus is on the applicants to demonstrate the existence of special circumstances to justify the grant of a stay of execution. The reasons must relate to the enforcement of judgment. They must be deposed in the affidavit filed in support of the application ..."

[35] Again in the case of Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd, [2002] 3 MLJ 49:

"The approach taken by most judges appears to be that a successful litigant should not be deprived of the fruits of a judgment obtained in his favour, unless there are special circumstances (or special grounds) that justify a stay of execution to be granted.

The weight of authorities appears to me to say that the special circumstances must be special, not ordinary, common or usual circumstances and that go to the execution of the judgment and not to the validity or correctness of the judgment (or merits of the appeal).

Many judges considered the question whether the appeal, if successful, is rendered nugatory under the head of special circumstances. (Sometimes, the phrase used is whether the Defendant, if successful, can be restored to its former position). The general view appears to be that that is the more, if not the most, important factor of all.

Of course, no one ever attempts to define special circumstances, for good reasons. It is also a common view that it depends on the facts of a particular case. Thus, "business realities" has been taken into consideration, I believe under this head.

It is a common view that merits of the appeal (or correctness or validity of the judgment) is not special circumstances. Some judges do not use the term "special circumstances". They straight away consider whether the appeal, if successful, would be rendered nugatory. Examples are Mohamed Mustafa and Gentali (M) Sdn Bhd lwn. Kawasaki Sunrock Sdn Bhd, [1996] 3 MLJ 597 and the term was used "in the sense that the defendant is deprived of the fruits of his success."

I think it does not matter whether the nugatory factor is considered under the head "special circumstances" or not, so long as it is considered.

[36] It is therefore clear that the door is not closed on what may constitute "special circumstances".

What Special Circumstances Found Within The Facts Of This Case?

[37] I am not satisfied that the applicants have established "special circumstances" in this case to justify the stay. I have considered the fact that the non-granting of the stay would render the appeal to the Court of Appeal to be nugatory. As will be shown later I have taken into account this issue and all the other circumstances in this case in deciding if the stay should be granted.

[38] What I think the "special circumstance" that would have swayed this Court in in this case granting the stay was that the Winding-Up Order was directly detrimental to the interest of the shareholders/contributories of the company with evidence in support introduced by affidavits as per Kosma Palm Oil case (see excerpt in para 35).

[39] In addition, it would have helped if it was shown that the company was a viable commercial enterprise capable of operating in the ordinary course of business to meet the objects for which it was incorporate

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