JUDGMENT

Ahmad Fairuz Zainol Abidin JCA:

(Enclosure 3: For dismissal of motion for interim stay)

Introduction

[1] This is an application by the Appellant for an interim stay of execution of both the High Court judgment dated 3 October 2024 and the conditional stay order dated 3 January 2025, pending the disposal of the appeal against the said conditional stay order.

[2] After hearing submissions from both parties and careful consideration of the authorities cited, this Court unanimously dismisses the application for the reasons set forth herein.

Background

[3] The underlying dispute arose from a fraudulent land transaction where the respondent purchased land through a Sale and Purchase Agreement, only to subsequently lose the land due to fraud perpetrated by the vendors and their solicitors. The Appellant, as the respondent's solicitors in the transaction, was found liable for professional negligence.

[4] The High Court , after a full trial, entered judgment in favor of the respondent for approximately RM15,000,000.00. The Appellant filed an appeal and subsequently applied for a stay of execution.

[5] On 3 January 2025, the High Court granted a conditional stay order requiring the appellant to remit 50% of the total judgment sum to be held equally by the solicitors of both parties as stakeholders by 2 February 2025.

[6] The Appellant failed to comply with this condition by the stipulated deadline and instead filed the present appeal against the conditional stay order, seeking an interim stay pending disposal of that appeal.

The Appellant's Contentions

[7] The Appellant advanced several grounds in support of the interim stay application, primarily centered on the financial incapacity of the respondent to restore the judgment sum if the appeal succeeds.

[8] The Appellant argued that the respondent lacks financial capacity to restore the judgment sum if the appeal succeeds, citing the company's negative equity position, accumulated losses of RM1,200,000.00, and current liabilities exceeding RM17,000,000.00 against assets of RM16,700,000.00. The Appellant submitted that this financial weakness renders any successful appeal nugatory as the funds could not be recovered.

[9] The Appellant further contended that there is a real risk of dissipation of the judgment sum, particularly given that the respondent's sole director and majority shareholders are Chinese nationals and China lacks reciprocal enforcement agreements with Malaysia. The Appellant emphasized that the company was established solely to hold the land and has no substantial operations, increasing the risk that funds would be transferred beyond the reach of Malaysian courts.

[10] The Appellant submitted that various factors constitute special circumstances warranting an interim stay, including conflicting High Court judgments requiring resolution by the Court of Appeal, complex legal and factual issues affecting conveyancing practice in Malaysia, risk of irreparable damage to the appellant's professional reputation, and potential misuse of professional indemnity insurance and compensation funds.

[11] The Appellant argued that without an interim stay, both the primary appeal and the appeal against the conditional stay order would be rendered nugatory if successful, as the respondent could not restore the funds once received and potentially dissipated.

The Respondent's Position

[12] The Respondent contended that pursuant to O 45 r 10 of the Rules of 2012, the Appellant's failure to comply with the conditional stay order by the stipulated deadline resulted in the order lapsing, and the appellant is deemed to have abandoned its benefit. The Respondent argued that this failure to comply disentitles the appellant from seeking further relief.

[13] The Respondent argued that none of the factors raised by the Appellant constitute special circumstances sufficient to warrant an interim stay, particularly where a conditional stay mechanism already provides adequate protection. The Respondent