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2023 MarsdenLR 1372
COURT OF APPEAL PUTRAJAYA
TENAGA NASIONAL BHD – Appellant
Versus
TRANSFORMER REPAIRS & SERVICES SDN BHD & ORS – Respondent
[Civil Appeal No: B-02(A)-1872-10/2021]
An execution creditor cannot lawfully seize movable property that does not belong to the execution debtor; the burden of proof lies with the party asserting ownership.
Headnote:(A) Execution of Writ of Seizure and Sale - Legal ownership and equitable ownership - The court examined whether an execution creditor can seize movable property not belonging to the execution debtor. The court found that the seizure was unlawful as the property belonged to a third party. (Paras 1-100)
(B) Burden of Proof - Legal and evidential burden - The court clarified the burden of proof in cases involving equitable ownership, stating that the burden lies with the party asserting ownership. (Paras 52-56)
(C) Laches and Estoppel - The court ruled that the plaintiff was not barred by laches or estoppel due to the concealment of relevant facts by the debtor. (Paras 60-66)
(D) Judicial Auction - The court determined that the judicial auction was invalid due to the wrongful seizure of the property, emphasizing the need for execution creditors to verify ownership before seizing property. (Paras 57-59) (E) Result - The appeal was allowed, declaring the plaintiff as the lawful owner of the property, invalidating the seizure and auction, and ordering the return of the property. (Paras 99-100)
| Table of Content |
|---|
| 1. main issue of ownership and seizure. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. background of the contract and disputes. (Para 7 , 8) |
A. Introduction
[1] This appeal discusses the main issue of whether an execution creditor can lawfully seize and sell movable property in the possession of an execution debtor pursuant to a writ of seizure and sale issued by the Court (WSS) when the movable property does not belong in equity to the execution debtor (Main Issue).
B. Background
[2] We shall refer to parties as they were in the High Court (HC).
[3] Zanwa Sdn Bhd (Zanwa) owned a piece of land held under "Pajakan Negeri No 24314, Lot No 87991, Mukim Kelang, Daerah Kelang, Selangor" with a postal address at Lot No 41, Jalan Perigi Nenas 8/7, Pulau Indah Industrial Park (Phase 1 Westport 42920 Port Klang, Selangor Darul Ehsan (Land).
[4] Zanwa used the Land as a factory for its manufacturing and business operations.
[5] The Managing Director of Zanwa was Ir. Zainal Abidin Bin Haji Abdullah (Ir. Zainal).
[6] By way of a "Letter of Acceptance" dated 18 April 2011, the plaintiff company (Plaintiff) awarded a contract to Zanwa [Contract (Plaintiff-Zanwa)] whereby Zanwa would supply, erect and commission two units of "90 MVA, 132/33 KV Power Transformers with Associated Ancillary Equipment for PMU 132/33 KV Setia Alam" (2 Power Transformers) for the Plaintiff at a price of RM9,320,000.00 [Price (2 Power Transformers)]. The Contract (Plaintiff-Zanwa) was signed on 19 July 2011.
[7] With regard to the 2 Power Transformers:
(1) the 2 Power Transformers were supposed to be built by Zanwa on the Land;
(2) the Plaintiff had paid a total sum of RM8,106,491.34 to Zanwa [Plaintiff's Payment (Zanwa)];
(3) notwithstanding the Plaintiff's Payment (Zanwa), Zanwa had breached the Contract (Plaintiff-Zanwa) by not delivering the 2 Power Transformers to the Plaintiff in accordance with the Contract (Plaintiff-Zanwa); and
(4) until the date of decision of this appeal, the 2 Power Transformers had been kept on the Land.
[8] On 28 April 2017, there was a public auction of the Land and the Land was sold to the 2nd defendant (2nd Defendant). The 2nd Defendant did not however take possession of the Land. Furthermore, the 2nd Defendant did not take any action regarding the 2 Power Transformers on the Land.
[9] The 1st defendant company (1st Defendant) had been incorporated pursuant to a "Shareholders Agreement" which had been concluded by Zanwa and Magnitude Power Sdn Bhd on 1 March 2018.
[10] On 29 July 2017, the 1st Defendant entered into a tenancy agreement with the 2nd Defendant for a period of two years from 1 September 2017 to 31 August 2019 [Tenancy Agreement (1st Defendant-2nd Defendant)].
[11] The 1st Defendant allowed Zanwa to continue its manufacturing and business operations on the Land, including the completion of the 2 Power Transformers for the Plaintiff.
[12] Zanwa was wound up on 5 April 2019 by an order of HC in Kuala Lumpur (Winding Up Court). The Winding Up Court also appointed the Official Receiver to be Zanwa's liquidator.
[13] On 11 July 2019:
(1) Zanwa sent a letter to the Plaintiff [Zanwa's Letter (11 July 2019)] which stated as follows, among others:
(a) Zanwa was "in the process of closing down temporarily" as Zanwa's overheads were high and Zanwa was losing business;
(b) Zanwa was facing financial problems and would like to meet with the Plaintiff to discuss about Zanwa's proposal to close down temporarily; and
(c) Zanwa proposed to assign the "balance" works under the Contract (Plaintiff-Zanwa) to a third party.
(2) Ir. Thevindra Raj Selva Raj (Ir. Thevindra), the Plaintiff's Project Manager (Central-1) in the Grid Development Department, Grid Division, visited the Land.
[14] On 14 August 2019, Zanwa sent a letter to the Plaintiff [Zanwa's Letter (14 August 2019)]. According to Zanwa's Letter (14 August 2019), among others:
(1) Zanwa had sold its factory to a third party and had to vacate the factory by 15 Septem
