The standard for granting a stay in bankruptcy proceedings is 'sufficient reason', not 'special circumstances', as per Section 97 of the Bankruptcy Act 1967.

[1] This was an appeal against a refusal to exercise discretion and grant a stay of execution. The learned High Court Judge did not find the circumstances presented as special warranting an exercise of discretion in the appellant's favour We unanimously found that exercise to be erroneous and we accordingly intervened to allow the appeal. These are the full reasons for our decision.

Relevant Facts

[2] The respondent granted a principal aggregate sum of USD 70 million term loan facility under the Overseas Project Financing ("facility") to a company known as Shenyang Shenyang Amusement Park Co Ltd ("borrower"). The facility was to part finance the development, construction and completion of an amusement park and a commercial complex known as "Magic Goat Paradise" in Shenyang, China ("project"). The project was being undertaken by the borrower on leasehold lands No 05208002 (TXGY (2005) No 17) (113778 m2) and No 05208004 (TXGY (2005) No 18) (1263 m2). The land use rights of the project lands were registered to the borrower.

[3] The repayment of the facility was secured by the appellant and three others through a joint and several guarantee agreement dated 29 May 2007 in favour of the respondent. Another company known as Harapan Serentak Sdn Bhd, also gave a corporate guarantee for the same facility while a mortgage contract dated 29 May 2007 was executed in respect of the project lands.

[4] The borrower defaulted. On 2 August 2013, the respondent sued the borrower and all the guarantors seeking to recover the outstanding sum of USD78,249,610.85 as at 11 October 2013 together with interest thereon at the rate of 5% per annum from the date of filing to the date of full settlement ("civil suit"). After a full trial, the Court gave judgment in favour of the respondent on 28 February 2014. The appellant's appeal to the Court of Appeal was dismissed on 8 October 2014. The appellant then sought leave to appeal to the Federal Court. He failed to secure leave. His application was dismissed on 10 March 2015.

[5] Meanwhile, bankruptcy proceedings were initiated against the appellant. A request for the issuance of a bankruptcy notice was filed on 28 May 2014. To this, the appellant applied for stay pending the disposal of his application for leave to appeal to the Federal Court. This application was filed on 23 December 2014. When leave was refused on 10 March 2015, the appellant withdrew this application.

[6] He then filed a stay in the civil suit on 29 March 2015. This was to stay all forms of execution of the judgment dated 28 February 2014 pending the determination of a civil suit that the respondent had filed in China against the borrower ("China suit"); and pending the realisation of the securities held by the respondent. The respondent referred to this as the "Civil Suit Stay Application." This application was dismissed on 8 June 2015 by the High Court. The Court of Appeal affirmed that decision on 23 November 2015.

[7] On that same date, 29 March 2015, the appellant also filed another application to stay the bankruptcy proceedings He also cited the same reasons that were relied on in the "Civil Suit Stay Application"; that is, the China suit and the realisation of securities This is apparent from the affidavit of the appellant affirmed on 26 March 2015.

[8] The application for stay in the bankruptcy proceedings was dismissed. The learned High Court Judge was of the considered opinion that "there is no sufficient reason which merits the stay".

The Decision Of The Court Of Appeal

[9] We are fully aware that the test under s 97 of the Bankruptcy Act 1967 is the provision of "sufficient reason" and not of "special circumstances", the test for stay of executi