LOW JEE KEONG v NEXT FORTUNE SDN. BHD.

Case Significance

Confirms that a stay of execution pending appeal requires special circumstances, and that the risk of a winding-up petition founded on the judgment is met by a Fortuna injunction rather than by staying execution of a regularly obtained summary judgment.

This High Court decision at Shah Alam concerns an application to stay execution of a summary judgment pending appeal, and it restates that a stay is not granted as of course. The court had earlier allowed the plaintiff's application under Order 14 of the Rules of Court 2012 to enter summary judgment against the defendant, having found no triable issue. Immediately after judgment was pronounced the defendant made an oral application for a stay of execution, which was refused, and the defendant then filed a formal application under Order 45 rule 11 and/or Order 92 rule 4 for a stay of execution pending its appeal to the Court of Appeal. The sole question was whether this was a proper case for the court to exercise its discretion to grant such a stay.

The court applied the settled principle that a successful litigant is not to be deprived of the fruits of its judgment save where special circumstances are shown. The defendant's central concern was the risk that the judgment might be used as the basis for a winding-up petition, with serious legal and commercial consequences for it. The court held that this did not amount to a special circumstance justifying a stay: if the defendant's real grievance was the threat of winding up, the appropriate remedy was to apply for a Fortuna injunction to restrain any abuse of the winding-up process, an application that could then be assessed on its own merits, rather than to obtain a stay of execution of the judgment.

Finding no special circumstances, the court dismissed the stay application with costs of RM7,000. The judgment illustrates that a stay of execution pending appeal requires special circumstances, and that the prospect of a winding-up petition is addressed through a Fortuna injunction rather than by staying execution of a regularly obtained judgment.