NZ BINA SDN BHD v 1. ) REAPLITE INDUSTRY SDN BHD 2. ) OCBC BANK (MALAYSIA) BERHAD PIHAK TERKILAN Kerajaan Malaysia

Case Significance

Illustrates when a conditional stay of execution pending appeal is justified in construction litigation, where the appeal raises mixed questions of law and fact over a substantial judgment sum.

This High Court decision at Johor Bahru determines an application by a sub-contractor for a stay of execution of the court’s judgment pending the disposal of its appeal to the Court of Appeal. In the underlying suit the sub-contractor, NZ Bina Sdn Bhd, had claimed liquidated ascertained damages of over two million ringgit against the main contractor, Reaplite Industry Sdn Bhd, for alleged breach of the terms of a sub-contract forming part of a highway project whose head contract was between the sub-contractor and the Public Works Department. That claim was dismissed after a full trial. The claim against the second defendant, OCBC Bank (Malaysia) Berhad, had not been pursued once a consent judgment was recorded between them, but the bank remained on the record because it had issued the performance bond that featured in the substantive judgment, the trial court having decided that the main contractor was entitled to the balance of that bond. On the stay application, the sub-contractor pointed to a recent payment credited to its account by the Public Works Department, representing the return of the balance of the performance bond, which the trial court had held the main contractor was entitled to. The Court considered that the questions underlying the appeal were of mixed law and fact — turning on whether the sub-contractor’s termination of the contract was valid and on the construction of the contractual clauses and the findings made after trial — rather than pure findings of fact, and that the judgment sum was substantial. Balancing these matters and the parties’ financial positions, the Court, per Nurulhuda Nur’aini bte Mohamad Nor J, granted a conditional stay, ordering that a sum from the performance-bond balance paid by the Public Works Department be retained and held by solicitors as a condition of the stay. The judgment illustrates when a conditional stay pending appeal is justified in construction litigation.