Universal Trustee (Malaysia) Berhad v Lambang Pertama Sdn Bhd, 16-07-2014

• Judge: Y.A. DATUK WONG KIAN KHEONG
• Judgment Date: 16 July 2014
• Court: High Court (Malaysia)
• Record Number: 22NCC-623-10/2013

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

(COMMERCIAL DIVISION)

SUIT NO: 22NCC-623-10/2013

ANTARA

UNIVERSAL TRUSTEE (MALAYSIA) BERHAD

(No Syarikat : 17540-D) …PLAINTIFF

DAN

1. LAMBANG PERTAMA SDN BHD

(No Syarikat : 289527-H)

2. IDAMAN UNGGUL BERHAD

(No Syarikat : 279343-W) ...DEFENDANTS

GROUNDS OF JUDGMENT

(Defendants’ application to stay plaintiff’s striking out application)

A. Background

1. This suit was filed by the Plaintiff on behalf of AmBank (M) Bhd (AmBank) on 24 October 2013.

2. In this suit, the Plaintiff claimed for recovery of outstanding sums in respect of Redeemable Secured Loan Stocks-A (RSLS-A) issued by the First Defendant and guaranteed by the Second Defendant.

3. RSLS-A should had been redeemed by the First Defendant on the second extended maturity date of 19 May 2009.

4. In this suit, the First and Second Defendants (Defendants) filed their defence and counterclaim against the Plaintiff (Counterclaim). The Counterclaim alleged various matters against the Plaintiff and AmBank.

5. The Plaintiff filed an application for summary judgment against the Defendants which was allowed by this Court (Nallini Pathmanathan J, reported in [2014] 3 MLRH 681) on 25 March 2014 (Summary Judgment). Nallini Pathmanathan J however ordered a stay of execution of the Summary Judgment pending the disposal of the Counterclaim (Stay of Summary Judgment).

6. The Plaintiff filed its application to strike out the Counterclaim (Plaintiff’s Striking Out Application) on 10 April 2014.

7. On 17 April 2014 the Defendants appealed to the Court of Appeal against the Summary Judgment (Defendants’ Appeal).

8. The hearing of the Plaintiff’s Striking Out Application was scheduled to be heard on 17 June 2014. However, on 10 June 2014, the Defendants filed this application to stay the hearing of the Plaintiff’s Striking Out Application pending disposal of the Defendants’ Appeal (Defendants’ Stay Application).

B. Which application to be heard first

9. On 4 July 2014, the Plaintiff’s Striking Out Application and the Defendants’ Stay Application came before me.

10. I decided to hear the Defendants’ Stay Application before disposing of the Plaintiff’s Striking Out Application. This is because if I hear the Plaintiff’s Striking Out Application first, this will render redundant the Defendants’ Stay Application. The Plaintiff’s learned counsel, Ms. Kong Chia Yee, to her credit, did not object to the disposal of the Defendants’ Stay Application before hearing the Plaintiff’s Striking Out Application.

C. Court’s jurisdiction to stay proceedings

11. Section 73 of the Courts of Judicature Act 1964 (CJA) provides as follows:

“An appeal shall not operate as a stay of execution or of proceedings under the decision appealed from unless the court below or the Court of Appeal so orders and no intermediate act or proceeding shall be invalidated except so far as the Court of Appeal may direct.”

(emphasis added).

12. Rule 13 of the Rules of the Court of Appeal 1994 states -

“An appeal shall not operate as a stay of execution or of proceedings under the decision appealed from unless the High Court or the Court so orders and no intermediate act or proceeding shall be invalidated except so far as the Court may direct.”

(emphasis added).

13. The above 2 statutory provisions (2 Statutory Provisions), in my view, provide the statutory jurisdiction for the High Court and Court of Appeal to stay –

(a) execution of any order or judgment; and

(b) proceedings

- pending disposal of an appeal to the Court of Appeal.

14. The wording of the 2 Statutory Provisions indicate that the general rule is that an appeal to the Court of Appeal does not stay –

(a) execution of an order or judgment which is the subject matter of the appeal; and

(b) proceedings in the High Court.

15. In view of the wording of the 2 Statutory Provisions, stay of execution and stay of proceedings pending appeal to Court of Appeal should be the exception and not the norm. If otherwise, the opening words in the 2 Statutory Provisions (appeal shall not operate as a stay of execution or of proceedings) will be undermined, if not rendered redundant.

16. As there are clear statutory provisions conferring an exceptional jurisdiction on the High Court and Court of Appeal to stay execution and to stay proceedings pending appeal to the Court of Appeal, there is no need to resort to the court’s inherent jurisdiction – Federal Court’s judgment in In Majlis Agama Islam Selangor v Bong Boon Chuen [2009] 6 MLJ 307, at 320.

17. Section 49(3) of the then named Supreme Court Act 1981 (applicable to England and Wales) (SCA) provides as follows:

“Nothing in [SCA] shall affect the power of the Court of Appeal or the High Court to stay any proceedings before it, where it thinks fit to do so, either of its own motion or on the application of any person, whether or not a party to the proceedings.”

18. SCA is now renamed the Senior Courts Act 1981 (to avoid confusion as the Supreme Court in England and Wales has replaced the House of Lords).

19. It is clear that s 49(3) SCA is different from the 2 Statutory Provisions. Hence, it is my view that English cases on stay of proceedings, should be read with caution.

20. As provided in the 2 Statutory Provisions, whether a court grants a stay of execution or a stay of proceedings is an exercise of judicial discretion dependent on the particular facts adduced in that court. Accordingly, judgments on these matters are purely illustrative and have no binding effect. The Court of Appeal held in Structural Concrete Sdn Bhd v Wing Tiek Holdings Bhd [1997] 1 CLJ 300, at 306 -

“Exercises of judicial discretion are not judicial precedent because they are only authority for the facts of the particular case”

D. When proceedings can be stayed pending disposal of appeal?

21. Case law does not distinguish stay of execution from stay of proceedings. Case law requires both applicants for stay of execution and stay of proceedings to show “special circumstances” to justify a stay.

22. I am of the view that an applicant for a stay of proceedings should bear a heavier burden vis-à-vis an applicant for a stay of execution. This is because an application to stay proceedings will hinder an expeditious disposal of a suit as decided by the following cases:

(a) the Court of Appeal held in Jagdis Singh Banta Singh v Outlet Rank (M) Sdn Bhd [2013] 1 CLJ 47, at 58, as follows -

It is important to stress that initiation of a suit in a court of law demands the suit will be heard expeditiously and completed without any inhibition midway. Therefore, where an application for stay of proceedings is intended to merely stop or suspend the proceedings, it will be refused. Some applicants, on seeing the weakness of their client’s case, would resort to application for stay and thereby waste the time of the other party and the court. The party simply cannot resort to the interlocutory of stay proceedings on having the slightest disagreement with any ruling of a trial judge. Courts are enjoined not to encourage such unwholesome practice.”

(emphasis added); and

(b) in L & M Concrete Specialists Pte Ltd v United Eng Contractors Pte Ltd [2002] 3 SLR 312, at para 17, the Singapore High Court stated that if every interlocutory order is appealed against and a stay of proceedings is sought –

“The litigation process would become most unsatisfactory if all such interlocutory applications must first receive the attention of the highest court in our system of justice before the next step could be taken.”

Singapore cases on stay of proceedings are persuasive as s 41(1) of the Singapore’s Supreme Court of Judicature Act is in pari materia with the 2 Statutory Provisions.

23. In deciding whether proceedings can be stayed pending the disposal of an appeal, the following factors should be considered:

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