Cheah Ngun Ying V Low Cheong & Sons Sdn Bhd & 4 Lagi

  

Download PDF Here

IN THE HIGH COURT OF MALAYA AT KUALA LUMPUR

 

(COMMERCIAL DIVISION) SUIT NO. D-22-1161-1993

 

BETWEEN

 

CHEAH NGUN YING

 

(Sebagai wasi dan pentadbir harta pusaka Low Kai Kui @ Low Lye Kooi, si mati)

 

AND

 

1. LOW CHEONG & SONS SDN BHD

 

2. LOW SEOW HAR @ LOW SAW HAR’

 

3. LOW LEE KING

 

4. WOO KAM NIN

 

(sebagai pemegang amanah Low Chee Yeong, Low Chee Yew dan Low Chee Keong)

 

5. WOO KAM NIN

 

(sebagai pemegang harta pusaka Low Cheong @ Low Yuen Cheong) …

 

PLAINTIFF

 

DEFENDANTS

 

1

 

GROUNDS OF DECISION

 

1. The 1st and 2nd Defendants’ have made an application under section 73 of the Court of Judicature Act 1964 for a stay of execution of the High Court order dated 30.9.2009 until the appeal against that judgment is heard and decided (Enclosure 64).

 

Brief Facts

 

2. An action was commenced in the High Court at Kuala Lumpur Civil Suit 40-D1-22-1161-1993 by the plaintiff against the Defendants claiming for a declaration that the distribution of shares in the 1st Defendant company pursuant to an Extraordinary General Meeting held on 15.10.1987 and the distribution/issuance of shares of 157,579 shares was in breach of fiduciary duties of the Directors and therefore, illegal and should be declared null and void.

 

3. After 10 days of trial the learned Judge on 30.9.2009 allowed the Plaintiff’s claim with costs. The learned Judge stated that the board of directors of the 1st Defendant was in breach of their fiduciary duties when

 

2

 

they made the issuance and allotment of shares of the late Low Kai (deceased) for the 1st Defendant.

 

4. The learned counsel for the Defendants in his submission stated that if the order for the stay of execution is not granted by the court, the appeal will be nugatory as the “Register of Members” will be rectified in accordance with the court order dated 30.9.2009. Counsel also contended that the status-quo of the Defendants will be affected.

 

5. The Plaintiff inter alia submitted that the 1st and 2nd Defendants had failed to show any evidence of any special circumstances that can be considered unusual, uncommon, extraordinary or exceptional that would entitle them to stay the execution of the Judgment dated 30.09.2009 or showed how their Appeal can become nugatory if the stay is not granted.

 

6. The case law on the subject matter of stay of execution pending appeal is rather clear. There is a unanimous view from the authorities that the powers to grant a stay of execution pending appeal is an exercise of discretion by the court based on established principles.

 

3

 

7. The Serangoon Garden Estate Ltd. v Ang Keng [1953] MLJ 116,

 

although only a judgment of the High Court (Singapore) is perhaps the most quoted case on the subject. In that case the High Court (Singapore) held that :

 

“The learned district judge had a discretion to grant a stay of execution. And I should not think it right to interfere with the exercise of his discretion if I was satisfied that he had exercised it on correct principles. There is no rule of practice limiting the exercise of his discretion. But it is a clear principle that the court will not deprive a successful party of the fruits of his litigation until an appeal is determined, unless the unsuccessful party can show special circumstances to justify it. The only ground, so far as appears in the written grounds for granting this stay, is that if the defendant succeeded in his appeal he could not be restored to the same position as before because the plaintiffs would have removed his pig sty.”

 

8. In Kosma Palm Oil Mill Sdn bhd & Ors v Koperasi Serbausaha Makmur Bhd [2003] 4 CLJ 1 Augustine Paul CJA (as he then was) held that :

 

4

 

“There are many factors that may constitute special circumstances and the fact that an appeal would be rendered nugatory if stay was refused is the most common one; it is an example of special circumstances. As nugatoriness is a species of special circumstances, a mere reference to it is sufficient to convey the correct legal impression, and any attempt to restrict the grant of a stay to nugatoriness, quite apart from its impropriety, will severely restrict the grounds upon which an applicant may rely. Therefore, the applicants were wrong in submitting that the nugatory approach was not a matter for consideration in this case and that only the special circumstances approach was relevant. They would have been correct if they had said that they were not relying on nugatoriness but on some other species of special circumstances. (p 16 b, d-e”)

 

9. On the question of stay, Abdul Hamid Mohamad JCA (as he then

 

was) in the case of Ming Ann Holding Sdn. Bhd. Danaharta Urus Sdn.

 

Bhd. [2002] 3 MLJ said :

 

“The grounds relied on by the appellant are nothing more than ‘fear of losing’; fear of losing business, fear of losing customers, fear of losing suppliers, fear of losing goodwill, fear of not being able to collect its debts from third parties, in case the appellant company is wound up.

 

5

 

All that the applicant has to do to avoid such ‘fears’ is to settle the judgment debt. ”

 

“The winding up petition is still pending. The applicant still has every opportunity to contest it. ”

 

10. On special circumstances, he further stated that :

 

“Whatever it is, those factors are not ‘special circumstances’ (if we want to use the term) nor do they show that the appeal, if successful, will be rendered nugatory (if we prefer that term)”.

 

“The weight of authorities consider that special circumstances must be special, not ordinary, common or usual circumstances and that go to the execution of the judgment and not the validity or correctness of the judgment ( or merits of the appeal ). The most important factor for consideration in granting a stay appears to be whether the appeal if successful is rendered nugatory. It does not matter whether the nugatory factor is considered under the head “ special circumstances “ so long as it is considered…”

 

6

 

11. In Affin Bank Bhd. v Tan Sri Kishu Tirathrai [2004] 3 CLJ 350 it

 

was held that :

 

“A stay of execution may be granted if there are extraordinary or special circumstances to justify it. The special circumstances must, however, relate to the enforcement or execution of the judgment and not the merits of the appeal. That the appeal, if successful, would be rendered nugatory, is one of the grounds that can constitute special circumstances”.

 

12. In this case the 1st and 2nd Defendants’ fear that the Plaintiff will transfer the shares to third parties and hence the status-quo of the parties will be affected if the Defendants appeal is allowed.

 

13. I am of the opinion that whatever it is, these factors are not “Special Circumstance” nor do they show that the appeal if successful, will be rendered nugatory.

 

14. The rectification of the 1 Defendant’s share registry is not something of difficulty and can be reversed if the Court of Appeal is to allow the Defendants application.

 

7

 

15. The first Defendant is a privately owned company and the transfer of shares in the company is restricted by the Articles of Association of the company. In this respect Article 34 of the Memorandum and Articles of Association the company (1st Defendant) restricts the transfers of shares to members of the company only. Hence the 1st and 2nd Defendant’s fear that the shares will be disposed to third parties is baseless. There is no risk of the 1st Defendant and 2nd Defendants’ appeal becoming nugatory.

 

16. In the circumstances, this is a case in which the court will not exercise its discretion to grant a stay.

 

17. On these grounds, I dismiss the 1st and 2nd Defendants’ application in enclosure ( 64 ) with costs.

 

Dated : 10.50.2010

 

(DATUK HANIPAH BINTI FARIKULLAH)

 

JUDICIAL COMMISSIONER HIGH COURT KUALA LUMPUR (COMMERCIAL DIVISION)

 

8

PDF Source: http://kl.kehakiman.gov.my