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Imagine this – A and B decided to duke out their differences in court. A lost and was ordered by the court to comply with a certain court judgment in B’s favour. Dissatisfied with the outcome, A filed an application to appeal the matter to a higher court. Is A required to comply with the court judgment in the interim?
The answer is yes, A is required to comply with the court judgment unless A applies for a stay of execution and succeeds in getting one.
What is a stay of execution
A stay of execution, in a layman term, is an order which if granted, temporarily restrain (using the above example) B from enforcing his/ her rights against A until the appeal is heard and disposed of by the court.
The law governing stay of execution
1. THE GENERAL RULE
The general rule can be found the case of Re Kong Thai Sawmill (Miri) Sdn Bhd; Lim Beng Sung v Kong Tai Sawmill (Miri) Sdn Bhd & Ors (No 2)1, which states that the court will generally only grant a stay of execution if a party:
- Can prove/ justify that there are special circumstances to do so;
- The special circumstances are related to the enforcement of the judgment or order that is being appealed2; and
- The party who applies for a stay undertakes to pay damages to the other party is the appeal is dismissed.
Why? This is to ensure that the successful party is not deprived of the fruits of their litigation.
2. HOW DO YOU DEFINE “SPECIAL CIRCUMSTANCES”?
In Leong Poh Shee v Ng Kat Chong3, Raja Azlan Shah (as His Majesty then was) noted that:
“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 is usual or common.”
Based on the above observation, it only serves to emphasize the fact that there is a myriad of circumstances that could constitute special circumstances with each case depending on its own facts.
3. WHAT ARE SOME OF THE FACTORS THAT CONSTITUTE “SPECIAL CIRCUMSTANCES”?4
- The appeal will be rendered nugatory i.e. futile if the stay is not granted. However, it must be noted that nugatoriness cannot be used as a standalone reason to ask for a stay of execution.
- If the appeal is allowed, the party who applied for a stay cannot be reinstated to his or her original position.
4. WHAT ARE SOME OF THE FACTORS THAT DO NOT CONSTITUTE “SPECIAL CIRCUMSTANCES”?5
- Where the party applies for the stay as to give themself time to satisfy the judgment or alleviate their financial problem i.e. stall time satisfies the judgment order.
- If there is a risk that if the stay is allowed, the party who applied for the stay may dispose of their assets, defeating the judgment order.
Example of case law where a stay of execution is granted/ not granted
In Pewira Affin Bank Bhd v Lim Ah Hee @ Sim Ah Hee6 the court noted that an application for a stay cannot be applied to prevent a winding-up proceeding. This is because:
- Winding up proceedings are not governed by ROC (instead, it is governed by Winding-Up Rules7 and Insolvency Act8)9;
- The focus being the judgment debtor, not the debt and the object is to appoint a receiver in the person of the Official Assignee over the assets of the debtor and to convert the status of the debtor into a bankrupt with certain disqualification and disabilities, the most important being the loss of control over his properties to the Official Assignee10.
- Unlike an execution proceeding, a winding-up proceeding is a proceeding by way of petition just like a divorce, winding up or election to name a few bears the characteristics of a fresh proceeding, unlike an execution proceeding11.
In Ambank (M) Berhad v Mujur Zaman Sdn Bhd & Ors12, the court noted that a stay should be granted in cases involving land, and especially in situations involving the auctioning or the sale of such land. This is because:
- If a stay was not granted, there is a real likelihood that one party who the case in the lower courts would proceed with the auction of the land in question. Thus the party who applied for a stay might lose the said lands even before the disposal of their appeal and the appeal would therefore be rendered nugatory;
- The party who applied for a stay would sustain serious and irreparable damage as the loss of the said land may be irrecoverable; and
- The loss of the said lands might not be adequately compensated by damages even though the party who won the matter in the lower court has the capacity to pay the party who is applying for a stay.
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1.  1 MLJ 131.
2. Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd  4 CLJ 1.
3.  3 MLJ 514.
4. Kosma Palm Oil Mill Sdn Bhd & Ors v Koperasi Serbausaha Makmur Bhd  4 CLJ 1.
6.  3 MLJ 253.
9. Pewira Affin Bank v Lim Ah Hee @ Sim Ah Hee  3 MLJ 253 at Paragraph 52.
12.  3 MLJ 608.