Kosma Palm Oil Mill Sdn Bhd & Ors

[2003] 1 MLRA v. Koperasi Serbausaha Makmur Bhd i

KOSMA PALM OIL MILL SDN BHD & ORS

v.
KOPERASI SERBAUSAHA MAKMUR BHD
[2003] 1 MLRA 536

Federal Court, Kuala Lumpur

Mohd Noor Ahmad, Rahmah Hussain FCJJ, Augustine Paul JCA
[Application No: 08-98-2003-C]
22 August 2003

Civil Procedure: Injunction — Interim injunction — Appeal against refusal to grant

injunction — Injunction to restrain respondent from trespassing into premises —
Agreement to sell terminated — Whether non-disclosure of termination relevant in
application for ex parte injunction — Whether entry without court order by respondent
owner lawful — Whether status quo ought to be preserved — Whether there was
bona fide serious issues to be tried — Erinford injunction — Whether relevant in the
circumstance of the case

This was the appellants’ appeal against the decision of the High Court
dismissing the appellants' inter partes application for an interim injunction to
restrain the respondent from trespassing onto certain properties. It should be
noted that there was no dispute that the properties belonged to the respondent.
In dismissing the application, the High Court held that: (i) the grant of an
injunction is discretionary; (ii) the balance of convenience favoured the
respondent; (iii) damages would be an adequate remedy for the appellantss;
(iv) the status quo - before the appellants entered into the relevant agreements
for the purchase of the palm oil factory and estate from the defendant - should
be maintained; and (v) there was material non-disclosure of relevant facts
by the appellants when they applied for and obtained the ex parte interim
injunction against the respondent. The appellants appealed and contended that
damages alone would not be an adequate remedy. The appellants also argued
that the trial judge erred on the issue of maintaining the status quo. On the
question of material non-disclosure of relevant facts, the appellants argued that
the agreement, their compliance with the terms and their termination were
independent of the action of the appellants for trespass and inducement to
breach of contract. Thus, it was wrong for the trial judge to rule that such
failure was fatal to their case. The appellants sought and obtained an Erinford
injunction pending the disposal of their appeal to the Court of Appeal. The
respondent appealed against the grant of the Erinford injunction.
 Kosma Palm Oil Mill Sdn Bhd & Ors
ii v. Koperasi Serbausaha Makmur Bhd [2003] 1 MLRA

Held (dismissing the appellant’s appeal; setting aside the Erinford injunction):

(1) Since there was no dispute that the properties belonged to the respondent,
there was nothing unlawful in the respondent, as the owner of the properties,
regaining possession of the same. Bearing in mind that there was nothing to
indicate the manner in which the appellants gained possession, if there was a
trespasser, it would appear to be the appellants (para 14)

(2) Section 7 of the Act should not be applied in this case. There was nothing
to show that the appellants had come into possession of the properties on
the basis of any documentary evidence, let alone as a licensee. There was no
denying that the respondent had been in possession of the properties before the
grant of the Erinford injunction. (paras 18 & 22)

(3) The balance of convenience favoured the respondent. The justice of the
case did not lie in allowing the appellants to be in possession of the properties
belonging to the respondent. This would amount to allowing the appellants
to deprive the lawful owner of his properties. The contention that it would be
more convenient to allow the appellants to continue to control the properties
had no merit (paras 20–21)

(4) The question of maintaining the status quo did not arise and the finding of
the trial judge on the issue was quite irrelevant. However, the trial judge was
not completely wrong when he came to such finding. After all, the appellants
had failed to show how they came into possession of the properties (para 30).

(5) In any ex parte application, it is essential that there must be frank and fair
disclosure of all relevant materials including points that may be unfavourable to
an applicant. The cause of action for trespass pre-supposed that the appellants
were lawfully in possession of the properties to the exclusion of others. Taking
such a stand would amount to ignoring the true position of the genesis of the
relationship of the parties. The fact that the agreement had been terminated,
validly or otherwise, was obvious to be one of the defences that could be raised
by the respondent in response to an action for trespass. Further, O 29 r 1(2A) of
the Rules of the High Court 1980 mandates such a requirement. (paras 32–33)

(6) The relevance of the Erinford injunction as an issue depended on the finding
on the application for the inter partes injunction. It would make no sense to
consider the Erinford injunction when the appellants were not in possession of
the properties. In view of the conclusion on the inter partes issue, it was plainly
academic to consider the issue of an Erinford injunction for the purpose of this
appeal. With the dismissal of this appeal the Erinford injunction issued by the
trial court was ipso facto set aside. (paras 2, 19)
 Kosma Palm Oil Mill Sdn Bhd & Ors
[2003] 1 MLRA v. Koperasi Serbausaha Makmur Bhd iii

Case(s) referred to:

Ajaib Singh v. Jeffrey Fernandez [1970] 1 MLRH 480; [1971] MLJ 139 (refd)
Alexander v. Cambridge Credit Corp Ltd [1985] 10 ACLR 42 (refd)
Atkins v. GW Ry [1886] 2 TLR 400 (refd)
Broadford v. Young, Re Falconer's Trusts [1884] 28 Ch D 18 (refd)
Cambridge Credit Corporation Ltd v. Alexander & Ors [1985] 9 ACLR 669 (refd)
Che Wan Development Sdn Bhd v. Co-operative Central Bank Bhd [1989] 1 MLRH
267; [1989] 3 MLJ 40; [1989] 1 CLJ (Rep) 366 (refd)
Chung Khiaw Bank Ltd v. Hotel Rasa Sayang Sdn Bhd & Anor [1990] 1 MLRA 348;
[1990] 1 MLJ 356; [1990] 1 CLJ (Rep) 57 (refd)
Desu Rayudu v. AP Public Service Commission AIR [1967] AP 353 (refd)
Dickson Trading (S) Pte Ltd v. Transmarco Ltd [1987] 2 MLRH 270; [1989] 2 MLJ
408 (refd)
Government Of Malaysia v. Jasanusa Sdn Bhd [1995] 1 MLRA 213; [1995] 2 MLJ
105; [1995] 2 CLJ 701; [1994] 1 AMR 560 (refd)
Kerajaan Malaysia v. Dato' Hj Ghani Gilong [1995] 1 MLRA 360; [1995] 2 MLJ 119;
[1995] 3 CLJ 161; [1995] 2 AMR 1465 (refd)
Leader v. Direction de Disconto Gesellschaft [1915] 3 KB 154 (refd)
Leong Poh Shee v. Ng Kat Chong [1965] 1 MLRH 542; [1966] 1 MLJ 86 (refd)
Linotype-Hell Finance Ltd v. Baker [1992] 4 All ER 887 (refd)
Matang Holdings Bhd & Ors v. Dato Lee San Choon & Ors [1985] 2 MLRH 362;
[1985] 2 MLJ 406 (refd)
Metropolitan Real and General Property Trust Ltd v. Slaters and Bodega Ltd [1941] 1
All ER 310 (refd)
Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd [2002] 1 MLRA 214; [2002]
3 MLJ 49; [2002] 3 CLJ 380; [2002] 3 AMR 2867 (refd)
Mohamed Mustafa v. Kandasami (No 2) [1979] 1 MLRA 304; [1979] 2 MLJ 109 (refd)
Ranken v. Harwood, Ranken v. Boulton [1846] 5 Hare 215 (refd)
Re Kong Thai Sawmill (Miri) Sdn Bhd; Ling Beng Sung v. Kong Thai Sawmill (Miri)
Sdn Bhd & Ors (No 2) [1974] 1 MLRA 77; [1976] 1 MLJ 131 (folld)
Robinson & Co v. Continental Insurance Co of Mannheim [1915] 1 KB 155 (refd)
Rosengrens Ltd v. Safe Deposit Centres Ltd (19 July 1984) (unreported) (refd)
Sarwari Ainuddin v. Abdul Aziz Ainuddin [1995] 4 MLRH 388; [2000] 5 MLJ 391;
[1999] 8 CLJ 534 (refd)
See Teow Guan & Ors v. Kian Joo Holdings Sdn Bhd & Anor [1995] 2 MLRA 512;
[1995] 3 MLJ 598; [1997] 2 CLJ 299; [1996] 3 AMR 3733 (refd)
Serangoon Garden Estate Ltd v. Ang Keng [1953] 1 MLRH 690; [1953] MLJ 116 (refd)
Shree Swamiji v. State of Mysore [1963] 2 SCR 226 (refd)
Smith, Hogg & Co Ltd v. The Black Sea and Baltic General Insurance Co Ltd 162 LTR
11 (refd)
 Kosma Palm Oil Mill Sdn Bhd & Ors
iv v. Koperasi Serbausaha Makmur Bhd [2003] 1 MLRA

Syarikat Berpakat v. Lim Kai Kok [1982] 1 MLRH 863; [1983] 1 MLJ 406 (refd)
TC Trustees Ltd v. JS Darwen [1969] 2 QB 295 (refd)
The Annot Lyle [1886] 11 PD 114 (refd)
The Government Of Malaysia v. Datuk Kadir Mohamad Mastan & Another Case
[1993] 3 MLRH 207; [1993] 3 MLJ 514; [1993] 4 CLJ 98 (refd)
Tropiland Sdn Bhd v. DCB Bank Bhd & Ors [1999] 1 MLRA 615; [2000] 2 MLJ 65;
[2000] 1 CLJ 568; [2000] 1 AMR 766 (refd)
Utama Merchant Bank Bhd v. Dato' Mohd Nadzmi Mohd Salleh [2000] 4 MLRH 29;
[2001] 5 MLJ 317 [2001] 2 CLJ 235; [2001] 2 AMR 1687 (refd)
Wilson v. Church (No 2) [1879] 12 Ch D 454 (refd)
Wu Shu Chen (Sole Executrix Of The Estate Of Goh Keng How Deceased) v. Raja
Zainal Abidin Raja Hussin & Anor [1995] 4 MLRH 45; [1995] 3 MLJ 224; [1996] 2
CLJ 353; [1995] 3 AMR 2313
(refd)
Zasalim Development Sdn Bhd v. Lum Siew & Sons Sdn Bhd [2002] 4 MLRH 825;
[2002] 7 MLJ 119 (refd)
Legislation(s) referred to:
Civil Law Act 1956, s 3(1)
Counsel:
For the applicants: Abu Bakar Jais (Helmi Hamzah); M/s Zaid Ibrahim & Co
For the respondents: Mohd Arif Mahindar Abdullah (Sahadin Mohd Taib);
M/s Sahadin & Co
 Kosma Palm Oil Mill Sdn Bhd & Ors
[2003] 1 MLRA v. Koperasi Serbausaha Makmur Bhd v

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 Kosma Palm Oil Mill Sdn Bhd & Ors
536 v. Koperasi Serbausaha Makmur Bhd [2003] 1 MLRA

JUDGMENT

Augustine Paul JCA:

[1] The applicants entered into four agreements in 1998 for the purchase of
certain estate lands from the respondents subject to certain conditions. The
respondents are a co-operative society and are the registered owners of the estate
lands which were used for the planting and cultivation of oil palm and an oil
palm mill was erected on one of the lands. The applicants and the respondents
soon had disputes over the completion of the agreements and several legal
proceedings were instituted by them. Sometime in 2001 the respondents took
over possession of the estate lands. This resulted in the applicants obtaining an
interim injunction against the respondents on 26 September 2001. However,
the interim injunction was dissolved by the High Court of Temerloh on 2
April 2002 though an Erinford Order was granted in favour of the applicants
which resulted in them obtaining possession of the estate lands. The applicants
appealed to the Court of Appeal on the dissolution of the interim injunction.
It was dismissed on 12 May 2003 and the Erinford Order lapsed. An oral
application made by the respondents for consequential relief for possession
was refused. The respondents then filed an application in the High Court at
Temerloh for consequential relief over the estate lands for the status quo of the
parties to remain as of the time prior to the signing of the agreements. This
application was allowed on 7 July 2003. The High Court dismissed an oral
application made by the applicants for a stay of execution. The applicants then
appealed to the Court of Appeal on the consequential relief granted by the
High Court and also applied for a stay of execution. Both the applications were
dismissed by the Court of Appeal on 21 July 2003. The applicants then filed an
application for leave to appeal to the Federal Court and a motion for a stay of
execution (“the motion”) of the order made by the High Court on 7 July 2003
and the Court of Appeal on 21 July 2003.

[2] The motion came up for hearing on 11 August 2003. In his submission
learned counsel for the applicants outlined the special circumstances that he
relied on in support of the motion. They are as follows:-

(i) the decision of the High Court of Temerloh dated 7 July 2003 and
the decision of the Court of Appeal dated 21 July 2003 had summarily
changed the status quo of the proprietorship and management of the
disputed land because the substantive application by the respondent in
High Court of Kuantan through civil suit no 22-45-2002 with regard
to the validity of the agreements and vacant possession which has not
been disposed off. Further, the Respondent should have invoked s 7
and 8 of the Specific Relief Act 1950 (Revised 1974) and O 89 of the
Rules of High Court, 1980 and not to resort to O 92 r 4 of the Rules
of the High Court in the Respondent’s Application 2;
 Kosma Palm Oil Mill Sdn Bhd & Ors
[2003] 1 MLRA v. Koperasi Serbausaha Makmur Bhd 537

(ii) the decision of the High Court of Temerloh dated 7 July 2003 had
summarily denied the Applicants’ rights over the disputed lands. The
Applicant should remain the proprietor of the land unless the High
Court of Kuantan has decided otherwise. The decision of the High
Court of Temerloh on 7 July 2003 justifies this application;

(iii) the repercussion of the decision of the High Court of Temerloh

dated 7 July 2003 are as follows:-

- the Applicants will have to terminate the employment of 100 local

workers.

- the Applicants have to send back more than 1000 foreign workers
according to the immigration rules. This is because they only have a
valid working permit to work with the Applicants.

- there will be breaches of contracts by the Applicants against third

parties and Sri Cemerlang Mill Management Sdn Bhd

- the Applicants will be liable to all of the Respondent’s liability as the

Respondent’s creditors had agreed to novate the Respondent’s liability
to the Applicant for the sum of RM100 million.

- the Applicants will not be able to settle the debts if there is no stay of
execution against the decisions of the High Court of Temerloh dated
7 July 2003 and Court of Appeal dated 21 July 2003. This is because
the Applicants generate their income from the disputed estates.

(iv) if status quo of both parties before the decision of the High Court
of Temerloh on 7 July 2003 is preserved, it will not prejudice any
party;

(v) the High Court of Temerloh should have not made a Consequential
Order yet. The learned Judicial Commissioner should only make
such decision if the High Court of Kuantan has disposed off the
Respondent’s application for declaration in their favour In this case,
the High Court of Kuantan has not even heard the Respondent’s
application;

(vi) therefore, the decision of the High Court of Kuantan will become
academic and nugatory in the event the Respondent executed the
decision of High Court of Temerloh dated 7 July 2003 and the
decision of the Court of Appeal dated 21 July 2003;

(vii) the Applicants’ application for leave to appeal to this honourable

court and notice of appeal to the Court of Appeal against the decision
of the High Court of Kuantan dated 7 July 2003 through Notice of
Appeal 1 will also become academic and nugatory;
 Kosma Palm Oil Mill Sdn Bhd & Ors
538 v. Koperasi Serbausaha Makmur Bhd [2003] 1 MLRA

(viii) the Respondent only initiated the action for Consequential Order
and declarations after the Applicants had administered and managed
the disputed estates for more than 5 years;

(ix) the Respondent had directed their solicitors not to proceed with
the registration of the stamped and executed transfer form with the
land office.

[3] In his reply learned counsel for the respondents said that the applicants are
RM2 companies. Their assets belong to the respondents. The estate lands were
always in their possession with their own employees. It was only in August
2001 that the applicants attempted to take possession of the estate lands and
offered employment to the respondents’ employees in secret. The income from
the estate lands running into millions of ringgit belongs to the respondents. The
estimated damages caused by the interim injunction obtained by the applicants
is RM144,000,000 as of 7 July 2003. The respondents said that the applicants
had abandoned the purpose of corporatization for which they had entered into
the agreements and had attempted to sell off the estate lands. A newspaper art
that appeared in The Star on 22 December 2001 was annexed to the affidavit
of the respondents to support the allegation. The respondents further claimed
that when they took possession of the estate lands on 29 July 2003 more than
90% of the workers were not present as they had left the estates. The estates
were in a poor state of upkeep. The title of the estate lands is in the name
of the respondents. Although there is no valuation of the estate lands it is
estimated to be worth between RM300 to RM400 million. Both parties agreed
that possession of the estate lands after 1998 is in dispute.

[4] In submitting on the law relating to stay of executions learned counsel for
the applicants relied on Government Of Malaysia v. Jasanusa Sdn Bhd [1995] 1
MLRA 213; [1995] 2 MLJ 105; [1995] 2 CLJ 701; [1994] 1 AMR 560; Kerajaan
Malaysia v. Dato’ Hj Ghani Gilong [1995] 1 MLRA 360; [1995] 2 MLJ 119; [1995]
3 CLJ 161; [1995] 2 AMR 1465 and Ming Ann Holdings Sdn Bhd v. Danaharta
Urus Sdn Bhd [2002] 1 MLRA 214; [2002] 3 MLJ 49; [2002] 3 CLJ 380; [2002]
3 AMR 2867 to argue that the motion is grounded on special circumstances.
He then referred to Zasalim Development Sdn Bhd v. Lum Siew & Sons Sdn Bhd
[2002] 4 MLRH 825; [2002] 7 MLJ 119 where Malik Ishak J said at p 148:-

In essence, by virtue of the doctrine of stare decisis, the courts are

bound by the Federal Court decision of Kerajaan Malaysia v. Dato’ Hj
Ghani Gilong [1995] 1 MLRA 360; [1995] 2 MLJ 119; [1995] 3 CLJ
161; [1995] 2 AMR 1465, and Government Of Malaysia v. Jasanusa Sdn
Bhd [1995] 1 MLRA 213; [1995] 2 MLJ 105; [1995] 2 CLJ 701; [1994]
1 AMR 560, to adopt the ‘special circumstances’ approach. Thus,
with respect, the Court of Appeal’s decision in See Teow Guan & Ors
v. Kian Joo Holdings Sdn Bhd & Anor [1995] 2 MLRA 512; [1995] 3
MLJ 598; [1997] 2 CLJ 299; [1996] 3 AMR 3733 (CA), which applied
the ‘nugatory’ approach should be rejected. I had in All Persons In
 Kosma Palm Oil Mill Sdn Bhd & Ors
[2003] 1 MLRA v. Koperasi Serbausaha Makmur Bhd 539

Occupation Of The House And The Wooden Stores Erected On A Portion

Of Land Held Under Grant No: 26977 For Lot 4271 In The Township Of
Johor Bahru Johor v. Punca Klasik Sdn Bhd [1996] 3 MLRH 641; [1996]
4 MLJ 533; [1998] 5 CLJ 49; [1996] 2 AMR 1855, while applying
the principle of stare decisis had applied the ‘special circumstances’
approach. My learned brother Mohd Hishamudin J also adopted a
similar view in Tneoh Hong Seng v. Dayani Sdn Bhd [1997] 2 MLRH
595; [1998] 2 CLJ Supp 79. Thus, it is now well settled that it is the
‘special circumstances’ approach that should be adopted and applied.

[5] In view of the stand adopted by learned counsel in his argument on the
special circumstances and nugatory tests based on the authorities he referred to
I asked him to explain the relationship between both these approaches. He said
that the nugatory approach is not a matter for consideration and that what is
relevant is only the special circumstances. This would appear to be consistent
with the views expressed by Malik Ishak J and Mohd Hishamudin J when
they rejected the nugatory approach. The preference of one approach in favour
of the other can be further seen in the write-up in the Malaysian Court Practice
where it says at p 3771-3772:-
Some courts have shown a preference for the nugatory test in deciding
whether to grant a stay of execution pending appeal, ie that the
appeal would be rendered nugatory if the stay is not granted; see Ban
Lee Sdn Bhd v. Renganathan Narayanan [1998] 1 MLRH 516; [1998]
3 CLJ Supp 425; H & R Johnson Tiles Ltd & Anor v. H & R Johnson
(Malaysia) Bhd [1997] 8 MLRH 369; [1998] 3 CLJ Supp 441; Perwira
Affin Bank Ltd v. KI Production Sdn Bhd [2000] 1 MLRH 639; [2000]
4 MLJ 652; [2000] 4 CLJ 482 at 484; [2004] 1 AMR 442 (a stay was
granted pending disposal of an appeal against an order for sale in
foreclosure proceedings where, inter alia, as land had a special value,
the decision of the Court of Appeal would be rendered nugatory if
the stay was refused). Where this ground is pleaded, the court may
take into account the merits of the appeal: Tsen Kyun Tshin v. Lee Tse
Khiong [1998] 2 MLRH 137; [1998] 4 MLJ 319; [1998] 3 CLJ 148,(the
application was dismissed as based on the evidence, the appeal was
bound to fail).
However, other courts have stated that the test to be applied in an
application for a stay of execution is the special circumstances test,
following the Federal Court’s decision in Kerajaan Malaysia v. Dato’ Hj
Ghani Gilong [1995] 1 MLRA 360; [1995] 2 MLJ 119; [1995] 3 CLJ
161; [1995] 2 AMR 1465, and not the nugatory test. See also Bidang
Cerdas Sdn Bhd v. Sayfol Management Sdn Bhd [1998] 1 MLRH 308;
[1998] 2 CLJ Supp 7, HC; Paganelli Sdn Bhd v. Care-Me Direct Sales
Sdn Bhd [1999] 1 MLRH 368; [1999] 2 CLJ 669, HC. The special
circumstances must be explained in the affidavit supporting the
application, not brought up only at submissions: Tneoh Hong Seng v.
Dayani Sdn Bhd [1997] 2 MLRH 59; [1998] 2 CLJ Supp 79, HC.
 Kosma Palm Oil Mill Sdn Bhd & Ors
540 v. Koperasi Serbausaha Makmur Bhd [2003] 1 MLRA

[6] The view expressed by learned counsel on the law relating to stay of
executions and the prevailing view in some quarters make it necessary
for me to first determine its propriety to facilitate a lawful appraisal of the
grounds advanced in support of the motion. This, in essence, would entail
a consideration of the relationship between the special circumstances and
nugatory approaches.

[7] The general rule is that an appeal shall not operate as a stay of execution
unless the Court so orders. Accordingly, as Brown J said in Serangoon Garden
Estate Ltd v. Ang Keng [1953] 1 MLRH 690; [1953] MLJ 116 while commenting
on the discretion to grant a stay:-

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 shew special circumstances to justify it.

[8] This is a re-statement of the common law rule explained in The Annot
Lyle[1886] 11 PD 114 where Lord Esher MR said at p 116:-

... that an appeal shall be no stay of proceedings except the court may
so order We are asked to depart from this rule, although it is admitted
that there are no special circumstances in this case which afford a
ground for so doing. If in any particular case there is a danger of the
appellants not being repaid if their appeal is successful, either because
the respondents are foreigners, or for other good reason, this must be
shewn by affidavit, and may form a ground for ordering a stay. To grant
the present application would, in the absence of special circumstances,
clearly be to act contrary to the provisions and intention of the Rules
of Court.

[9] The need to establish the existence of special circumstances to enable the
court to grant a stay of execution has been well established in this country.
See, for example, the Federal Court cases of Re Kong Thai Sawmill (Miri) Sdn
Bhd; Ling Beng Sung v. Kong Thai Sawmill (Miri) Sdn Bhd & Ors (No 2) [1974] 1
MLRA 77; [1976] 1 MLJ 131; Kerajaan Malaysia v. Jasanusa Sdn Bhd [1995]
1 MLRA 213; [1995] 2 MLJ 105; [1995] 2 CLJ 701; [1994] 1 AMR 560 and
Kerajaan Malaysia v. Dato’ Hj Ghani Gilong [1995] 1 MLRA 360; [1995] 2 MLJ
119; [1995] 3 CLJ 161; [1995] 2 AMR 1465. There are numerous other cases
which have adopted this test. See, for example, Leong Poh Shee v. Ng Kat Chong
[1965] 1 MLRH 542; [1966] 1 MLJ 86; Ajaib Singh v. Jeffrey Fernandez [1970] 1
MLRH 480; [1971] MLJ 139; Syarikat Berpakat v. Lim Kai Kok [1982] 1 MLRH
863; [1983] 1 MLJ 406; Matang Holdings Bhd & Ors v. Dato Lee San Choon & Ors
[1985] 2 MLRH 362; [1985] 2 MLJ 406; Che Wan Development Sdn Bhd v. Co-
operative Central Bank Bhd [1989] 1 MLRH 267; [1989] 3 MLJ 40; [1989] 1 CLJ
(Rep) 366 and Wu Shu Chen (sole executrix of the estate of Goh Keng How, deceased)
v. Raja Zainal Abidin Raja Hussain & Anor [1995] 4 MLRH 45; [1995] 3 MLJ
224; [1996] 2 CLJ 353; [1995] 3 AMR 2313. However, the need to show special
 Kosma Palm Oil Mill Sdn Bhd & Ors
[2003] 1 MLRA v. Koperasi Serbausaha Makmur Bhd 541

circumstances to justify a stay was declared as bad law in See Teow Guan & Ors
v. Kian Joo Holdings Sdn Bhd & Anor [1995] 2 MLRA 512; [1995] 3 MLJ 598;
[1997] 2 CLJ 299; [1996] 3 AMR 3733 where Gopal Sri Ram JCA, after having
referred to Dickson Trading (S) Pte Ltd v. Transmarco Ltd [1987] 2 MLRH 270;
[1989] 2 MLJ 408, Mohamed Mustafa v. Kandasami (No 2) [1979] 1 MLRA 304;
[1979] 2 MLJ 109 and Alexander v. Cambridge Credit Corp Ltd[1985] 10 ACLR
42, said at p 605-606:-

At one time it was thought that an appellant had to demonstrate that

there were special circumstances warranting a stay of proceedings or
of execution. This was founded on the notion that a successful litigant
ought not to be deprived of the fruits of his litigation. See the case
of The Annot Lyle[1886] 11 PD 114. The authority constantly relied
upon in support of the proposition that special circumstances ought
to be demonstrated before a stay of execution may be granted is the
judgment of Brown J in Serangoon Garden Estate Ltd v. Ang Keng [1953]
1 MLRH 690; [1953] MLJ 116. For my part, having considered the
more recent authorities on the subject, I have come to the conclusion
that that decision is bad law, and ought no longer to be followed by
this court.

[10] His Lordship then said at p 610:-

In my judgment, the paramount consideration governing an

application for a stay, whether of execution or of proceeding, or, in
the case of an application for some other form of interim preservation
of the subject matter of an appeal, such as the grant of an injunction
or other appropriate relief under s 44(1) of the Courts of Judicature
Act 1964, is that the appeal to this court, if successful, should not be
rendered nugatory. If upon balancing all the relevant factors, this court
comes to the conclusion that an appeal would be rendered nugatory
without the grant of a stay or other interim preservation order, then, it
should normally direct a stay or grant other appropriate interim relief
that has the effect of maintaining the status quo.

[11] The declaration that the need to establish special circumstances in an

application for a stay is bad law warrants serious consideration as it departs
from established authorities. In Ming Ann Holdings Sdn Bhd v. Danaharta Urus
Sdn Bhd [2002] 1 MLRA 214; [2002] 3 MLJ 49; [2002] 3 CLJ 380; [2002] 3
AMR 2867 Abdul Hamid Mohamad JCA (as he then was) said at p 404:-

First, See Teow Guandeclares ‘special circumstances’ as bad law and

should no longer be followed. With respect, I do not think that the
Court of Appeal can do so, particularly in view of the Federal Court
judgments in Re Kong Tai Sawmill (Miri) Sdn Bhd, Jasanusa Sdn Bhdand
Dato’ Hj Ghani Gilong.
 Kosma Palm Oil Mill Sdn Bhd & Ors
542 v. Koperasi Serbausaha Makmur Bhd [2003] 1 MLRA

[12] For my part I shall first refer to the authorities cited in See Teow Guan & Ors
v. Kian Joo Holdings Sdn Bhd & Anor [1995] 2 MLRA 512; [1995] 3 MLJ 598;
[1997] 2 CLJ 299; [1996] 3 AMR 3733 to demolish special circumstances as
bad law. In Dickson Trading (S) Pte Ltd v. Transmarco Ltd[1987] 2 MLRH 270;
[1989] 2 MLJ 408 what was in issue was not the special circumstances test.
The submission made in that case, based on Serangoon Garden Estate Ltd v. Ang
Keng [1953] 1 MLRH 690; [1953] MLJ 116, was that it was not sufficient that
the plaintiffs could not be restored to their original position: there must also
be other grounds, eg, that there were merits in the appeal. It is the latter part
of the judgment of Brown J that Chan Sek Keong JC rejected to hold that the
likelihood of an appeal, if successful, being rendered nugatory, is a sufficient
ground on its own for a stay of execution. The learned judge is correct in his
ruling and nowhere did he refer to or reject the special circumstances test. In
Mohamed Mustafa v. Kandasami (No 2) [1979] 1 MLRA 304; [1979] 2 MLJ 126
it was held that one of the determining factors that calls for consideration
is whether by not making an order to stay the execution it would make the
appeal, if successful, nugatory in that it would deprive an appellant of the
results of the appeal. It merely states that one of the determining factors in
considering an application for stay is nugatoriness. This clearly means that
there must be other factors which must, as of necessity, come under some
form of classification. Though the judgment does not refer to the classification
specifically as special circumstances a proper appreciation of the relationship
between the two concepts (as I will soon explain) will reveal that it is anchored
on the premise of special circumstances. It is therefore not a rejection of the
special circumstances test. In Alexander v. Cambridge Credit Corp Ltd [1985] 10
ACLR 42 Kirby P said that instead of special circumstances it is sufficient
that the applicant for the stay demonstrates a reason or an appropriate case to
warrant the exercise of discretion as the legislature has not said so in terms.

[13] It must be observed that the legislation in question in that case accords
with the one in The Annot Lyle [1886] 11 PD 114 (as stated in Cambridge Credit
Corporation Ltd v. Alexander & Ors [1985] 9 ACLR 669) where it was held that the
absence of special circumstances would go against the provisions and intention
of the Rules of Court. Kirby P’s views which give a different interpretation to
a rule of Court cannot be accepted for two reasons. Firstly, since the general
rule is that a stay should not be granted any exception carved out of it certainly
requires something more than an ordinary reason. This interpretation is
consistent with established rules of construction. It is obvious that an exception
to a general rule cannot be interpreted so as to nullify or destroy the rule itself
(see Desu Rayudu v. AP Public Service Commission AIR 1967 AP 353). It cannot
swallow the general rule (see Shree Swamiji v. State of Mysore [1963] 2 SCR 226).
The grant of a stay for any ordinary reason will have just that effect and destroy
the general rule that there shall be no stay. Thus I agree with Ramly Ali JC (as
he then was) who said in Utama Merchant Bank Bhd v. Dato’ Mohd Nadzmi Mohd
Salleh [2000] 4 MLRH 29; [2001] 5 MLJ 317; [2001] 2 CLJ 235; [2001] 2 AMR
1687 that there must be “strong justification” for a party to come within an
 Kosma Palm Oil Mill Sdn Bhd & Ors
[2003] 1 MLRA v. Koperasi Serbausaha Makmur Bhd 543

exception to a general rule. It is for this reason that Esher MR said The Annot
Lyle [1886] 11 PD 114 that the granting of a stay, in the absence of special
circumstances, would be acting contrary to the provisions and intention of the
rules of court. Secondly, Alexander v. Cambridge Credit Corp Ltd [1985] 10 ACLR
42 is a 1985 Australian judgment. Section 3(1) of the Civil Law Act 1956
provides that save so far as other provision has been made or may hereafter be
made by any written law in force in Malaysia the court shall in West Malaysia
apply the common law of England and the rules of equity as administered in
England on 7 April 1956. Even developments in English common law after that
date are not automatically applicable in Malaysia (see Chung Khiaw Bank Ltd
v. Hotel Rasa Sayang Sdn Bhd & Anor [1990] 1 MLRA 348; [1990] 1 MLJ 356;
[1990] 1 CLJ (Rep) 57). The need to prove special circumstances before a stay
of execution can be granted is English common law that has been adopted in
this country. It is not appropriate to override such law by Australian common
law that was developed in 1985. Thus the authorities relied on in See Teow Guan
& Ors v. Kian Joo Holdings Sdn Bhd & Anor [1995] 2 MLRA 512; [1995] 3 MLJ
598; [1997] 2 CLJ 299; [1996] 3 AMR 3733 do not support the conclusion
arrived at to declare special circumstances as bad law.

[14] Be that as it may, it is my misfortune to say that the description of the

special circumstances test in See Teow Guan & Ors v. Kian Joo Holdings Sdn Bhd &
Anor [1995] 2 MLRA 512; [1995] 3 MLJ 598; [1997] 2 CLJ 299; [1996] 3 AMR
3733 as bad law stems from a misunderstanding of the relationship between
the concepts of special circumstances and nugatoriness. An appreciation of
the meaning of the phrase “special circumstances” may resolve the confusion.
As IanChin JC (as he then was) said in The Government Of Malaysia v. Datuk
Kadir Mohamad Mastan & Another Case [1993] 3 MLRH 207; [1993] 3 MLJ 514;
[1993] 4 CLJ 98 at p 101-102:-

An attempt was made to define special circumstances by Raja Azlan

Shah (as His Majesty then was) in the case of Leong Poh Shee v. Ng Kat
Chong[1965] 1 MLRH 542; [1966] 1 MLJ 86, viz:

Special circumstances, as the phrase implies, must be special under

the circumstances as distinguished from ordinary circumstances. It
must be something exceptional in character, something that exceeds
or excels in some way that which is usual or common.

The definition only serves to emphasize the fact that there are myriad
circumstances that could constitute special circumstances with each
case depending on its own facts. I am of the opinion that the list of
factors constituting special circumstances is infinite and could grow
with time. Any attempt to limit the list or close a category would be to
impose a fetter on the exercise of the discretion of the court whether to
grant or stay an execution; making the discretion less of a discretion.
This is surely not what discretion is all about.
 Kosma Palm Oil Mill Sdn Bhd & Ors
544 v. Koperasi Serbausaha Makmur Bhd [2003] 1 MLRA

[15] The resultant matter for determination are the factors or reasons that
may constitute special circumstances. Generally stated they are circumstances
which go to the enforcement of the judgment (see Sarwari Ainuddin v. Abdul
Aziz Ainuddin [1995] 4 MLRH 388; [2000] 5 MLJ 391; [1999] 8 CLJ 534).
With regard to the specific factors that constitute special circumstances I refer
again to Government of Malaysia v. Datuk Hj Kadir Mohamad Mastan & Another
Application [1993] 3 MLRH 207; [1993] 3 MLJ 514; [1993] 4 CLJ 98 where
IanChin JC (as he then was) said at p 101:-

What, then, constitute special circumstances? It was said in Mohamed

Mustafa v. Kandasami (No 2) [1979] 1 MLRA 304; [1979] 2 MLJ 126,
at p 127, that:-

One of the determining factors that calls for consideration is whether

by not making an order of stay of the execution it would make the
appeal if successful, nugatory in that it would deprive an appellant of
the results of the appeal. How pertinent that factor would be may vary
according to the circumstances of each particular case.

[16] In Smith, Hogg & Co Ltd v. The Black Sea and Baltic General Insurance Co Ltd
162 LTR 11 Scott LJ said at p 12:-

The Court of Appeal has had to consider this question some time ago
and decided that the practice on appeals to the House of Lords was
that stay of execution, pending such an appeal, would not be granted
save under very exceptional circumstances, such as for instance, where
execution would destroy the subject-matter of the action or deprive
the appellant of the means of prosecuting the appeal.

[17] In Rosengrens Ltd v. Safe Deposit Centres Ltd (unreported, 19 July 1984, CA,
Lexis Nexis) Dillon LJ said:-

The most common special circumstance is, normally no doubt,

that it would be doubtful whether, if the judgment was enforced,
the defendant would get his money back if the appeal subsequently
succeeded. But there are others as, for instance, if there is a likelihood
that the money the subject of the judgment, if paid over, would go
to a foreign jurisdiction where the defendant would have difficulty
recovering it.

[18] Finally, in Re Kong Thai Sawmill (Miri) Sdn Bhd; Ling Beng Sung v. Kong Thai
Sawmill (Miri) Sdn Bhd & Ors (No 2) [1974] 1 MLRA 77; [1976] 1 MLJ 131 Lee
Hun Hoe CJ (Borneo) in writing for the Federal Court said in clear and lucid
terms at p 132:-

An appeal which would be nugatory if stay was refused by reason

of the poverty of the respondent would be an example of special
circumstances. See Wilson v. Church (No 2) [1879] 12 Ch D 454.
Another example is that payment of a judgment debt would destroy
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[2003] 1 MLRA v. Koperasi Serbausaha Makmur Bhd 545

the substratum of the appeal: Metropolitan Real and General Property

Trust Ltd v. Slaters and Bodega Ltd[1941] 1 All ER 310. However, an
allegation on an appeal that there has been misdirection at the trial
would not be sufficient to bring it within the special circumstances:
Monk v. Bartram [1891] 1 QB 346.

[18] Halsbury’s Laws of England 4th edn, vol 17 at para 455 cites the following
authorities as examples of special circumstances: that an appeal would be
nugatory if stay was refused, by reason of the respondent’s poverty (Wilson
v. Church (No 2) [1879] 12 Ch D 454, CA); or if payment of a judgment debt
destroys the substratum of the appeal (Metropolitan Real and General Property
Trust Ltd v. Slaters and Bodega Ltd [1941] 1 All ER 310, CA); absence from
England without address of a party to whom money in court was ordered to
be paid out (Broadford v. Young, Re Falconer’s Trusts [1884] 28 Ch D 18, CA);
that an administration order has been made against the estate or a debtor dead
since judgment and before execution issued (Ranken v. Harwood, Ranken v.
Boulton [1846] 5 Hare 215); judgment in favour of an alien enemy (Robinson
& Co v. Continental Insurance Co of Mannheim [1915] 1 KB 155; and judgment
against an alien enemy company whose assets are subject to Treasury control
(Leader v. Direction de Disconto Gesellschaft [1915] 3 KB 154, CA). It is therefore
clear beyond doubt that 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.
In other words special circumstances is the genus of which nugatoriness is a
species. If it has been shown that an appeal would be rendered nugatory if stay
was refused what it means is that a special circumstance has been established.
Thus they cannot be treated as separate heads and one cannot be an alternative
to the other Neither can one be accepted or rejected in favour of the other as
they are inter-related. See See Teow Guan & Ors v. Kian Joo Holdings Sdn Bhd &
Anor [1995] 2 MLRA 512; [1995] 3 MLJ 598; [1997] 2 CLJ 299; [1996] 3 AMR
3733 could have withstood scrutiny if it had merely referred to nugatoriness
without rejecting special circumstances. As nugatoriness is a species of special
circumstances a mere reference to it is sufficient to convey the correct legal
impression. Any attempt to restrict the grant of a stay to nugatoriness, quite
apart from its impropriety, will severely restrict the grounds on which an
applicant may rely. Learned counsel for the applicants is therefore wrong in
submitting that the nugatory approach is not a matter for consideration in this
case as what is relevant is only the special circumstances. He would have been
correct if he had said that he was not relying on nugatoriness but on some other
species of special circumstances.

[19] Having expressed my views on the law I shall now consider the motion.
Both parties delved into some length on the merits of their respective case in
the affidavits filed and the submission made in court. The merits of a party’s
case in a stay application is not a relevant matter for consideration. In this
regard Lord Denning MR said in TC Trustees Ltd v. JS Darwen [1969] 2 QB 295
at p 302:-
 Kosma Palm Oil Mill Sdn Bhd & Ors
546 v. Koperasi Serbausaha Makmur Bhd [2003] 1 MLRA

In this very case the defendants, in their affidavit under RSC Ord 14
did raise a plea for equitable relief. But it was overruled, and judgment
given against the defendants. It is not permissible to renew it again on
an application for a stay of execution....

It is true that the courts have an inherent jurisdiction to stay

proceedings, but only on grounds which are relevant to a stay. It does
not extend to grounds which are properly matters of defence of law or
relief in equity, for those must be raised in the action itself.

Mr Lipfriend raised a further point. He said that under RSC Ord 47

r 1, there is power, in the case of a writ of fi fa, or elegit, to stay
proceedings if there are special circumstances which render it
inexpedient to enforce the judgment or in case the applicant is unable
from any cause to pay the money. I think that is appropriate here.
The circumstances there again are circumstances which go to the
enforcement of the judgment: and not those which go to its validity
or correctness.

[20] As Abdul Hamid Mohamad JCA (as he then was) said in Ming Ann
Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd [2002] 1 MLRA 214; [2002] 3 MLJ
49; [2002] 3 CLJ 380; [2002] 3 AMR 2867 at p 403:-

The weight of authorities appears to me to say that the special

circumstances must be special, not ordinary, common or usual
circumstances and that go to the execution of the judgment and not to
the validity or correctness of the judgment (or merits of the appeal).

[21] Lee Hun Hoe CJ (Borneo) said in the Federal Court in Re Kong Thai
Sawmill (Miri) Sdn Bhd; Ling Beng Sung v. Kong Thai Sawmill (Miri) Sdn Bhd & Ors
(No 2) [1974] 1 MLRA 77; [1976] 1 MLJ 131 at p 132:-

Allegations that there has been misdirection that the verdict of

judgment was against the weight of evidence, or that there was
no evidence to support the verdict or judgment, are not special
circumstances on which the court will grant the application. See Monk
v. Bartram [1891] 1 QB 346.

[22] It is therefore unnecessary for me to consider the merits of the respective

case of the applicants and respondents.

[23] The onus is on the applicants to demonstrate the existence of special

circumstances to justify the grant of a stay of execution. The reasons must
relate to the enforcement of the judgment. They must be deposed in the
affidavit filed in support of the application (see Syarikat Berpakat v. Lim Kai
Kok [1982] 1 MLRH 863; [1983] 1 MLJ 406). Where it is alleged that there is
a danger of the unsuccessful party not being repaid if its appeal is successful
for any reason like, for instance, the insolvency of the other party, this must be
shown in the affidavit (see The Annot Lyle [1886] 11 PD 114). This issue was
 Kosma Palm Oil Mill Sdn Bhd & Ors
[2003] 1 MLRA v. Koperasi Serbausaha Makmur Bhd 547

dealt with articulately by Malik Ishak J in Wu Shu Chen (sole executrix of the estate
of Goh Keng How, deceased) v. Raja Zainal Abidin Raja Hussain & Anor [1995] 4
MLRH 45; [1995] 3 MLJ 224; [1996] 2 CLJ 353 at p 356; [1995] 3 AMR 2313:-

I venture to say that the applicant failed to establish by affidavit

evidence that Raja Zainal Abidin is insolvent and therefore would
not be in a position to reimburse RM25,892,000 and to pay damages
in the event the applicant succeeds in her appeal. Unless evidence is
adduced to the contrary, I must assume that Raja Zainal Abidin is not
solvent and this assumption is clearly borned (sic) out by his affidavit
in encl 45.

[24] In my opinion the motion can be disposed of on two grounds based on the
affidavits filed by both parties and the arguments advanced by them in court.
Firstly, the respondents alleged that the applicants had attempted to sell off
the estate lands which are registered in their name. This claim was supported
by a newspaper art and the respondents averred in their affidavit that the art
had been exhibited in the previous proceedings between the parties. This
allegation was not rebutted by the applicants. It must therefore be accepted
as true. There is therefore a risk that if the stay is granted the applicants may
dispose off the assets. In such a situation the court may, in the exercise of
its discretion, refuse to grant a stay (see Alexander v. Cambridge Credit Corp Ltd
[1985] 10 ACLR 42). Secondly, the applicants went to great lengths to highlight
the losses they will suffer and the inconvenience they will incur if the operation
of the consequential order obtained by the respondents is not stayed. They
will have to terminate the employment of 100 local workers and send back
more than 1000 foreign workers. There will be breaches of contracts by them
against third parties and Sri Cemerlang Mill Management Sdn Bhd They will
be liable to all of the respondents’ creditors as there was a novation of the
respondents’ liability to the applicants for the sum of RM100 million. The
applicants contended that they will not be able to settle the debts if the motion
is not granted as they generate their income from the disputed lands. It is clear
that the applicants have highlighted only the problems that they will encounter
if the motion is not successful. This line of reasoning militates against the
rationale that a stay is granted only for reasons that relate to the enforcement of
the judgment. It is not granted to give the unsuccessful party time to satisfy the
judgment or to alleviate his problems. As Abdul Hamid Mohamad JCA (as he
then was) said in Ming Ann Holdings Sdn Bhd v. Danaharta Urus Sdn Bhd [2002] 1
MLRA 214; [2002] 3 MLJ 49; [2002] 3 CLJ 380; [2002] 3 AMR 2867 at p 407:-

The grounds relied on by the appellants 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.
All that the applicant has to do to avoid such ‘fears’ is to settle the
judgment debt.
 Kosma Palm Oil Mill Sdn Bhd & Ors
548 v. Koperasi Serbausaha Makmur Bhd [2003] 1 MLRA

[25] I am therefore unable to accept Linotype-Hell Finance Ltd v. Baker [1992]

4 All ER 887 where it was held that if an unsuccessful defendant seeks a
stay of execution pending an appeal it is a legitimate ground for granting the
application if he is able to satisfy the court that without a stay of execution he
will be ruined and that he has an appeal which has some prospect of success.
Thus the applicants ought to have focussed on the inability of the respondents,
if at all, to re-instate them to their original position should they be successful
in the appeal. There must be an affidavit showing that if the losses are incurred
there is no reasonable prospect of them being reimbursed if the appeal succeeds
(see Atkins v. GW Ry [1886] 2 TLR 400). This they did not do. On the contrary it
must be observed that the estate lands are worth a considerable sum of money.
As a matter of fact when learned counsel for the applicants was submitting my
learned brother Mohd Noor Ahmad FCJ commented that the respondents are
in a position to pay damages if they are unsuccessful in the appeal. There was no
response to this very pertinent and relevant observation. In the circumstances
it can be assumed that the losses suffered by the applicants, being quantifiable,
could be recovered from the respondents should they lose in the appeal (see
Tropiland Sdn Bhd v. DCB Bank Bhd & Ors [1999] 1 MLRA 615; [2000] 2 MLJ
65; [2000] 1 CLJ 568; [2000] 1 AMR 766).

[26] In the upshot it is my view that the applicants have not succeeded in
establishing the existence of special circumstances in support of the motion
which must therefore be dismissed with costs.

[27] My learned brother Mohd Noor Ahmad FCJ and my learned sister
Rahmah Hussain FCJ have read this judgment in its draft form and agree with
it.